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JUL 2 8 1998 






ROOM 113 


MONDAY, JUNE 8, 1998 
1:35 P.M. 

































ROOM 113 


MONDAY, JUNE 8, 1998 
1:35 P.M. 

Reported by 

Evelyn J. Mizak 
Shorthand Reporter 

3 1223 03273 6515 






































GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NANCY MICHEL, Consultant on Governor's Appointments 





State Board of Education 


California Transportation Commission 

DANA W. REED, Member 

California Transportation Commission 


Planning and Conservation League 


California Transit Association 

4 49383 SFPL: ECONO JRS 
75 SFPL 06/06/03 12 



Proceedings 1 

Governor's Appointees: 


State Board of Education 1 

Questions by SENATOR HUGHES re: 

Things Learned While on Board 1 

Ability to Contribute 2 

Questions by SENATOR AYALA re: 

Selection of Student Member on 

State Board 2 

Motion to Confirm 2 

Committee Action 3 


California Transportation Commission 3 

Questions by SENATOR HUGHES re: 

Ways to Make Commission More Effective 

in Solving Transportation Problems 4 

Questions by SENATOR LEWIS re: 

Adoption of New STIP 4 

Highlights of STIP 5 

Questions by SENATOR AYALA re: 

Possible Move to Use Gasoline Tax Money 

to Fund Rail Transportation 6 

Possibility of Building Additional Lanes 

above Existing Freeways 7 

Motion to Confirm 7 

Committee Action 8 


DANA W. REED, Member 

California Transportation Commission 8 

Background and Experience 8 

Questions by CHAIRMAN BURTON re: 

Familiarity with Highway 101 Corridor 

between Marin and Sonoma 9 

Possible Solution to Over Congestion 

on 101 Corridor 9 

Alleged Long Standing Opposition to 

General Purpose Road Development 11 

Questions by SENATOR KNIGHT re: 

Concern with Two-lane Highways 

in High Desert Areas with Large 

Population Growth 11 

Plans to Improve the Two-lane Highways 12 

Need to Improve Highway 138 13 

Questions by SENATOR HUGHES re: 

High Cal Trans Administrative Costs 14 

CTC's Responsibility regarding Efficient 
Operation of Department of Transportation 15 

Questions by SENATOR LEWIS re: 

Studies on Efficacy of HOV Lanes in 

Orange County 16 

Statements by CHAIRMAN BURTON re: 

Mixed Flow HOV Lanes in Bay Area 16 

Motion to Confirm 17 

Witnesses in Support: 


Planning and Conservation League 17 

Questions by SENATOR AYALA re: 

League's Opposition to Makeup of 
Metropolitan Water District 18 

Reason for PCL's Involvement in MWD 18 

PCL's Sudden Interest in Ethnic 

Background 19 


California Transit Association 19 

Motion to Confirm 20 

Withdrawal of Prior Notion 20 

Committee Action 20 

Termination of Proceedings 20 

Certificate of Reporter 21 

— ooOoo — 
CHAIRMAN BURTON: Megan Kephart. 
MS. KEPHART: I am currently serving as the 
student member on the State Board of Education. My term ends in 

I'm happy to answer any of your 


I ' m done . 


CHAIRMAN BURTON: It ends in July? 

MS. KEPHART: July 31st, the end of July is when 

CHAIRMAN BURTON: Questions, Members of the 


CHAIRMAN BURTON: Senator Hughes. 

SENATOR HUGHES: What have you learned from being 

on the Board? 

MS. KEPHART: Oh, wow. 

SENATOR HUGHES: What did you learn, and did you 
learn what you expected to learn, or did you learn even more? 

MS. KEPHART: Well, I wasn't really sure — I 
didn't really think about too much what I was going to learn 
because I knew I was going to learn so much it wasn't even going 
to be fathomable. 

So, I learned an incredible amount about the 
education system itself. My first meeting I had some trouble 
with lingo that was being used. Some of the language was a 
little difficult for me, some things I didn't understand. So, 

members helped me out with that, and it's just gotten easier 
with every meeting, more than I could ever have hoped for. 

SENATOR HUGHES: What do you think you 
contributed/ or do you think you were allowed to contribute 

MS. KEPHART: I was definitely allowed to 
contribute my opinions. And I serve as the only student member, 
so of course, I contributed about student position. 

Usually, I agreed with most of the Board members, 
so there wasn't a lot of controversy. 


Thank you. 

CHAIRMAN BURTON: Any other questions. Members of 
the Committee? 

SENATOR AYALA: How are the students selected for 
that Board? It's statewide? 

MS. KEPHART: I applied at the beginning of my 
junior year. Then the applications were dwindled to a number of 
twelve, and those twelve students were sent to a student 
conference held by cast. And the delegates at that conference 
chose six of us to be interviewed by an ad hoc committee of the 
State Board of Education. 

SENATOR AYALA: Statewide. 

MS. KEPHART: Then we were appointed by the 


SENATOR AYALA: Quite an honor. 

CHAIRMAN BURTON: Moved by Senator Lewis. 


CHAIRMAN BURTON: Call the roll. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Senator Burton. 


SECRETARY WEBB: Burton Aye. Five to zero. 

CHAIRMAN BURTON: Congratulations. 

MR. KEPHART: Thank you. 

CHAIRMAN BURTON: Roger Kozberg, California 
Transportation Commission, replacing Jerry Epstein. 

MR. KOZBERG: Good afternoon. Senators. 

I am Roger Kozberg. The Governor appointed me to 
the California Transportation Commission in August. 

I'm pleased to be here, and I'm pleased to answer 
your questions. 

CHAIRMAN BURTON: Questions, Members of the 

SENATOR HUGHES: I'll ask a question if nobody 
else wants to. 

CHAIRMAN BURTON: Senator Hughes. 

SENATOR HUGHES: Mr. Kozberg, how effective do 

you think the Transportation Commission is? And what do you 
think we need to do to make it more effective to solve our 
transportation problems? 

MR. KOZBERG: Well, breaking that into digestible 
bites, I think that in my almost nine months now on the 
Transportation Commission, I have been incredibly impressed with 
its ability to deal with some very complex new legislation. I 
think that their ability to deal with SB 45 and the tremendous 
changes it's made have been nothing short of remarkable. I 
think that's not just a function of the Transportation 
Commission. I think there was a lot of help from Cal Trans, and 
from the CTC staff, and from all of the various regions. 

I think there is a tremendous sensitivity, 
awareness, and a feeling of responsibility on the part of the 
Commission of its responsibilities both to the Legislature and 
to the Governor and to the people of California for maintaining 
not only the highway system, but all the other modes of 

I wish I was smart enough to answer the rest of 
your question, but I'm sure going to work hard. If we can find 
a way to be more effective, we'll do that. I think perhaps we 
can be a little more user friendly in the future, and that's 
going to be one of my priorities. 


CHAIRMAN BURTON: Senator Lewis. 

SENATOR LEWIS: Mr. Kozberg, you recently adopted 
the STIP? 

MR. KOZBERG: That's correct, at our June 


SENATOR LEWIS: Can you give us some of the 
highlights? Is there any particular new direction you're 
heading in? 

CHAIRMAN BURTON: Statewide or Orange County 



SENATOR LEWIS: The most important first. 

MR. KOZBERG: Our authority under the STIP, our 
authority for the STIP has changed drastically under SB 45. We 
no longer have an item by item authority. Rather, we can either 
approve or disapprove each of the RTIPs. 

I think that we were very effective in helping 
some of the regions better understand the state's overall 
priorities, and I think that some very effective changes were 
made . 

The intent, as I understand it from Senator Kopp 
and others who were heavily involved in SB 45, was to make the 
regions more responsible for, and obviously more accountable, 
for their shares. 

I think that the very cooperative effort under 
the interregional program, I think we tried to work very hard, 
and staff tried to work very hard with the regions to leverage 
local funding, and ITIP and STIP funding where we could. 

I think the overall STIP adoption was about as 
good as it could have happened, particularly given the very 
short time between the passage of SB 45 and our need to adopt 
the STIP in June. 

CHAIRMAN BURTON: Other Members? Senator Ayala. 

SENATOR AYALA: Question. Is there a move afoot 
to use sales tax money for rail transportation? Gasoline tax 
for rail? 

MR. KOZBERG: Gasoline tax or sales tax? 

SENATOR AYALA: Gasoline tax to be used in the 
rail systems for transportation purposes. 

MR. KOZBERG: Well, there are several sales tax 

SENATOR AYALA: I'm talking about the gasoline 
sales tax. 

MR. KOZBERG: Gasoline taxes, as they flow back 
to the regions, I think a lot of those are used in rail. There 
are certain percentages that are required for public transit 
within SB 45, but I think that's all pretty well mandated. 

SENATOR AYALA: But the gasoline tax is generated 
from those who use the streets and the freeways, not rail 

Why would you use sales tax for rail service? 
Let the railroad people come up with a sales tax of their own. 

There was a move afoot a while back to do that. 

MR. KOZBERG: Just from a philosophical 
standpoint, I guess that every bit of merchandise, and every 
person who moves by rail improves for others the use of the 
highways. As we take people off the highways — 

SENATOR AYALA: But the gasoline tax is a user's 
tax, which should be used for highways, and freeways, and things 
of that nature. It's a user tax. The railroads don't use sales 

tax for that purpose. I just wondered why they would do that. 

Another question I have, there's some talk that 
it would be a good idea to build above existing freeways another 
layer of pavement up there, so that you have the right of way 
already. You don't have to purchase additional right of way. 
Use existing freeways with another layer up above to avoid the 
traffic jams we're experiencing in San Francisco, Los Angeles, 
San Diego, San Jose, all those big cities. 

Any critics to that? 

MR. KOZBERG: I think it's terrific if it can be 
done from an engineering standpoint. Many areas, I know that 
there's some serious seismic problems in the width of some of 
those freeways. Makes it difficult to build structures above 

SENATOR AYALA: You still wouldn't have to buy 
additional right of ways. It's already there. You just go 
another layer on it, like you do with the San Francisco Bay 

MR. KOZBERG: I'd be — under or over it, if we 
could do it. 

SENATOR AYALA: Thank you. 

CHAIRMAN BURTON: Any other questions. 

Any support? Any opposition? 


CHAIRMAN BURTON: Pleasure of Committee, moved by 
Senator Hughes. 

Call the roll. ■ 

SECRETARY WEBB: Senator Ayala. 



Ayala Aye. 
Senator Hughes. 

Hughes Aye. Senator Knight. 

Knight Aye. Senator Lewis. 

SECRETARY WEBB: Lewis Aye. Senator Burton. 

SECRETARY WEBB: Burton Aye. Five to zero. 
CHAIRMAN BURTON: Congratulations. 
MR. KOZBERG: Thank you. Senators. 
CHAIRMAN BURTON: Dana Reed, California 
Transportation Commission, replacing Peter Inman. 

MR. REED: Thank you, Mr. Chairman and Senators. 
I am Dana Reed. 

I have been involved in transportation most of my 
adult life, beginning in 1967 when I was appointed by then 
Governor Reagan as Executive Officer of the California Toll 
Bridge Authority. I then was appointed by Governor Deukmejian 
as Under Secretary of Business, Transportation and Housing, when 
Kirk West was the Secretary of Business, Transportation and 

I then went back to Southern California, where I 
served on the Orange County Transportation Commission, now known 
as the Orange County Transportation Authority. I was one of the 
founding directors and Vice Chairman of Southern California 

Regional Rail Authority, which is more conmionly known as Metro 

And I was honored by Governor Wilson last summer 
to be appointed to the California Transportation Commission. 

My passion, if you will, is public 
transportation, although I fully understand and recognize that 
the majority of Californians get to and from work by use of 
their private automobile. And the STIP which we adopted last 
week is overwhelmingly improvements on the state highway 

But notwithstanding that, I consider myself to be 
a supporter of Metro Link, and of Cal Train, and other mass 
transportation projects where appropriate, and certainly bus 
transportation and where that's a more cost effective means of 
getting our citizens to work and home at night, as opposed to 
rail whenever it's more cost effective to use buses. 

CHAIRMAN BURTON: Are you familiar with what they 
call the 101 Corridor going up north from Marin into Sonoma? 

MR. REED: Yes, sir, I am. You're talking about 
the rail corridor? 

CHAIRMAN BURTON: No, I'm just talking about the 
whole thing, where, starting around right as you get out of 
Novate until you get almost into Santa Rosa, it's just — 

MR. REED: Yes, sir. 

CHAIRMAN BURTON: What do you think a solution to 
that is? 

MR. REED: As the Senator wrote to us earlier and 
asked us to take good, hard look at that, especially adding an 


additional lane in each direction, I believe it was a High 
Occupancy Vehicle lane, I'm not certain, but I know that that 
was a recommendation that we made to Cal Trans, that that be 
included in their ITIP. As a result of the Commission's 
recommendation, it was added to the ITIP and approved at the 
last meeting. 

I don't think that's the total solution. I think 
that obviously it's a first step forward, but these corridors, 
getting people to work in the morning and home at night is, in 
my opinion, the most important thing that all of us in 
transportation, whether it be Cal Trans or the Commission, ought 
to be most concerned about. 

CHAIRMAN BURTON: It seemed to me, and I 
mentioned this to Senator Thompson, that driving, if you go up 
there -- and this is of absolutely no interest to anyone else on 
the Committee but me — if you tried to go over to the outside, 
you'd run into probably severe environmental study slow downs. 
There seems to be, in many portions of it, room for another lane 
on the inside, where I think the only environmental concerns 
would be, I guess, cumulative impact of cars because there's 
nothing there but gravel and shoulders. 

At some point, I think there 'd be ways there to 
alleviate the traffic. 

I remember driving when I first came to 
Sacramento, before 1-80 was really built, you'd have two lanes, 
and then it would open to the freeway, so you'd get logged. But 
then it would bus through. There, there's almost no busing 
through until you get past Santa Rosa. 


Why would somebody consider that you have a long 
standing outspoken opposition to general purpose road 
development that stands in the way of transportation fair 

MR. REED: I can't imagine why they would say 
that . 

CHAIRMAN BURTON: Maybe you could tell me what 
general purpose road development is? 

MR. REED: Perhaps they mean mixed flow lanes, as 
opposed tOf say. High Occupancy Vehicles. 

I've been told earlier that Drivers for Highway 
Safety, if that's from that group, I'm not sure, that's an 
organization from Orange County — 

CHAIRMAN BURTON: Enough said. 

MR. REED: -- that came to most of our commission 
meetings when I was on the Orange County Transportation 

Generally speaking, they are opposed. I don't 
mean to speak for them, because perhaps they're in the audience, 
but generally speaking, they are opposed to using tax revenues 
for public transit of any kind. 

CHAIRMTUSf BURTON: Senator Knight. 

SENATOR KNIGHT: I'm not familiar with what 
happened in the latest STIP, but I am concerned about some of 
the two-lane highways in the high desert area where we have 
effected tremendous growth over the last ten years. And we 
still have two-lane highways that are now accepting capacities 
that should be associated with four-lane interstates. 


MR. REED: Yes, sir. 

SENATOR KNIGHT: 138, which they call Blood 
Alley, there have been 63 deaths in the last five years on that 
highway. And we forecast the number of deaths every year. It 
bears it out. It's a highway that is totally over capacity. 

126 is another one, going into Ventura. 395 
going north to Mammoth. 

What are the plans for those areas? 

I know that 138, there was — and it probably 
still is on the Master Plan — the Metropolitan Bypass, which 
was an interstate between 15 and 5 to route people around the 
metropolitan area going south. Whether that'll come to pass or 
not, I don't know, but certainly 138 is becoming a metropolitan 
bypass with two lanes. 

MR. REED: Senator, basically under SB 45, which 
was adopted and signed by the Governor last year, there's 
basically two ways to get a particular project improved. 

One is through the regional plan, which is 75 
percent of the total money is allocated to the regions, and they 
make the decision themselves on a local level. 

The remaining 25 percent remains with Cal Trans, 
the ITIP, the interregional program. 

A very, very large percentage of that 25 percent 
goes to a nonurban areas, and a substantial portion of that this 
year was in the high desert and the areas around of which you 
speak. I don't know exactly the numbers, but I know that 
Highway 58 was dramatically improved, as was Highway 15, which I 
believe is in Senator Ayala's district, not yours. 


SENATOR KNIGHT: No, it's the intersection at 
Barstow, I think, that you're talking about. 

MR. REED: From Victorville to Bars tow was 
increased in both directions. 

As I say, a very substantial portion of the ITIP 
was for nonurbanized areas, such as you've suggested. 

Whether those particular highways were in the 
project or not, I'm not sure. 

SENATOR KNIGHT: I guess I'm more concerned, 
you've got an interstate 15. We're improving that, but yet, 
we're allowing Highway 138 to continue to kill people just 
because we can't add passing lanes, turn-out lanes, improve the 
washout areas, level it, do whatever we can to make it safer. 

I don't see the improvements there that are going 
to satisfy that problem. 

MR. REED: Highway safety has always been and 
must continue to be our number one issue. To the extent that 
additional lanes or passing lanes, or whatever, are necessary, 
that certainly is something I would be very supportive of. 

As far as 395 is concerned, it's interesting you 
should mention that because we had one non-unanimous vote, and 
it was on that issue of 395. 

I agree with you that more money, especially in 
the Mammoth area that you've mentioned, I believe that that road 
should be improved, as opposed to other uses of the money that 
were suggested. 

SENATOR KNIGHT: For example, on Highway 15, we 
put in the center barriers all the way from Victorville to 


Barstow, I think, which was in response to the number of 
accidents of trucks and cars crossing the barrier and hitting 
head-on in the other direction. And we've kind of satisfied 
that problem. 

I still don't see that we've done anything on 
138. That's a big concern in the district, a tremendous 

MR. REED: I'm sure it is a concern, and it's 
something that Cal Trans ought to, perhaps, come over and talk 
to you about. 

SENATOR KNIGHT: The commuters are increasing 

CHAIRMAN BURTON: Senator Hughes then Senator 
Lewis . 

SENATOR HUGHES: I understand there was a recent 
study done to cost out all the 50 states. It said that CTC was 
a first in transportation administrative costs. 

How do you account for that? Why are your 
administrative costs so high? Were you aware of that? 

MR. REED: No, Senator, I was not aware of that. 
We have a very small staff. 

SENATOR HUGHES: It's the Department of 
Transportation . 

MR. REED: Cal Trans. 


MR. REED: I wouldn't be able to answer that. 
Senator, I'm sorry. 

SENATOR HUGHES : Do you think that CTC has any 


responsibility in regard to the efficient operation of this 
department? Because you're going to take the blame for whatever 
they do inefficiently. 

I perhaps should have asked Mr. Kozberg this, 
too. I'm glad he's still sitting here, so that when you go back 
and you meet again, I think you need to ask for some 
accountability in terms of what they are doing. 

MR. REED: I agree with you completely. Senator. 
We as a whole — perhaps I shouldn't speak for my other 
Commissioners — but I know that we are very concerned about Cal 
Trans' ability to deliver the projects that we voted on last 

It is something that I know the Commission as 
whole, and I certainly would participate fully in this, is to 
monitor Cal Trans on a monthly basis at every meeting, work with 
Cal Trans to plot their ability to deliver the projects that we 
voted last week. 

SENATOR HUGHES: I think that you should keep in 
mind that 15 percent of administrative overhead certainly sounds 
excessive. If you pound away at that, I think you should look 
at what we're getting for that high overhead. 

MR. REED: Thank you. Senator. 


CHAIRMAN BURTON: Senator Lewis. 

SENATOR LEWIS: Mr. Reed, as long as I have you 
in the hot seat for a moment, I wanted to ask with regard to the 
HOV lanes that we do have in Orange County. 

What kind of studies do you have that indicate 


that they are, overall/ a net positive in regard to reducing 
transportation commutes? If you look at the 55 from the 91 
heading south towards John Wayne, for example, ofttimes in the 
morning you'll see the HOV lane is moving very, very quickly, 
and everybody else is stuck in traffic. 

My question is, if that was a free flowing lane, 
what effect would it have on the other lanes? 

MR. REED: Senator, I do not have any such 
studies. I have read of studies that indicate that the HOV 
lanes are not as effective as perhaps they might — or not as 
effective as they had been billed to be. 

I personally am not aware of any studies that Cal 
Trans or any other entity has done as to the effectiveness; 
however, it is clearly something that should be done, should be 
reviewed on a regular basis. 

I was not aware until just recently, when I was 
driving from San Francisco to Sacramento, I was not aware that 
in the Bay Area, HOV lanes are open to mixed flow except during 
commuting hours. That's something that clearly could be looked 
at and should be looked at in other areas of the state. 

CHAIRMAN BURTON: They have one that we're going 
to change. Basically the HOV have been mixed flow except for 
the commute hour, three to seven, whatever it is. Then, as part 
of a deal they cut with Berkeley over some overpass or sky pass, 
I don't know what, they now have HOV from seven in the morning 
till seven at night. 

As someone who travels during the off hours, 
there's nobody using them most of the time. We have requested a 


study of/ and I don't know whether it's the Commission, Cal 
TranS/ somebody, to try to get that down to six months, because 
that's observed more in the breach by people just driving their 
cars, because there's no one in the lane. 

I'm counter commute, so I go back to the city. 
There's nobody there because, you know, they're in the car pool 
lane going the other way. 

To me, I don't know about the second part of your 
statement, but that one was one of the dumbest things I've ever 
seen, not to have mixed use when the commute 's over, because 
they're damn near empty. 

Any more questions? Pleasure of the Committee? 


CHAIRMAN BURTON: Any opposition, support? 

MR. PATTON: Mr. Chairman, I'm Gary Patton for 
the Planning Conservation League. 

Sorry, I was at another hearing and missed the 
start of Mr. Reed's presentation and confirmation hearing. 

PCL has been pleased with his advocacy in 
appropriate cases, we believe, for rail and public transit on 
the Commission. We wanted to say a supportive word. 

We maybe make it difficult for Senator Lewis. I 
don't know. I hope not. 

But actually, Dana told me to come and say 
something nice about him, and I hope he doesn't bear any ill 

SENATOR AYALA: I have a question for the 


I have a letter from your organization protesting 
make up of the Metropolitan Water District because of lack of 
minority members. 

Have you seen the list here of this group? 
MR. PATTON: I have not reviewed it in 
connection with this hearing, but I would bet that MWD is 
better. I wouldn't doubt that. 

SENATOR AYALA: You didn't answer my question. 

Have you seen this list here, and why are you 
involved? Is that under your bylaws, you get involved with 
something that none of your business or what? I'm serious about 

MR. PATTON: I understand that. Senator. 

Generally, PCL follows bills. We decide which 
ones seem to be of highest priorities. 

With respect to your bill, which we did comment 
on, people from PCL in Southern California asked us to take the 
position we took. 

We had, in other words, constituents who were 
concerned about the change in the composition that your bill 
would make in the Metropolitan Water District. 

SENATOR AYALA: But not in this case? 

MR. PATTON: In this case we did not look at that 
issue in connection with this appointment. It was a personal 
comment that's being made essentially about the personal 
qualifications and the conduct of Mr. Reed. 

SENATOR AYALA: Your organization is involved 
with the environment. 


MR. PATTON: We are. 

SENATOR AYALA: I don't understand this interest 
in ethnic background all of a sudden. 

Do your bylaws call for that? 


SENATOR AYALA: Then why do you get involved with 
something that's not your business? 

MR. PATTON: Well, because our members want us 



SENATOR AYALA: I have no more questions 

MR. PATTON: Thank you. 

CHAIRMAN BURTON: One more and you're out the 

[Laughter. ] 
CHAIRMAN BURTON: What have you got to say, 


MR. GERBER: Ed Gerber with the California 
Transit Association. 

Just two things. For years I've worked with 
Dana, and I'm really impressed with his attempt to get the 
information to make decisions. When he first was appointed, he 
called up and said, can I come meet with you and find out what 
your issues are, so the opportunity to have the door open. 

Secondly, in the area of mass transportation, he 
has been very helpful in having us be part of the modal package 
that moved everybody to work every day. 

Therefore, we endorse his nomination. 

SENATOR LEWIS: Mr. Chairman, I would be honored 


to nominate my former primary opponent. 

CHAIRMAN BURTON: From the Flournoy wing of the 

SENATOR KNIGHT: I remove my motion. Senator 
Lewis is so adamant. 

CHAIRMAN BURTON: What was the vote differential? 

SENATOR LEWIS: It was nip and tuck. 

MR. REED: Until they started counting. 
[Laughter. ] 

CHAIRMAN BURTON: Call the roll. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Senator Burton. 


SECRETARY WEBB: Burton Aye. Five to zero. 

CHAIRMAN BURTON: Thank you. Congratulations. 

MR. REED: Thank you very much. 

[Thereupon this portion of the 

Senate Rules Committee hearing was 

terminated at approximately 2:28 P.M.] 
— ooOoo — 



I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California/ do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN J^i^^SS WHEREOF, I have hereunto set my hand this 

7 day of\^^ , 1998. 

Shorthand Reporte 



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SAN fra: 
PUBLIC L)oti/.r;Y 


ROOM 113 


MONDAY, APRIL 20, 1998 
1:36 P.M. 


Reported by 




ROOM 113 


MONDAY, APRIL 20, 1998 
1:36 P.M. 

Evelyn J. Mizak 
Shorthand Reporter 










GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NANCY MICHEL, Consultant on Governor's Appointments 





California State Lottery 


California State Employees Association 

JERRY WAYNE, Lottery Employee 
California State Employees Association 

JOAN BRYANT, Bargaining Services Manager 
California State Employees Association 



Proceedings 1 

Governor's Appointees; 


California State Lottery 1 

Background and Experience 1 

Questions by CHAIRMAN BURTON re: 

Layoffs before New Jobs Were 

Available to Affected Employees 2 

Opinion on Raising Age Limit on 

Buying Lottery Tickets 3 

Worry of Indians that Lottery Might 

Use Parimutuel Slot Machine Type Games 4 

Odds of Winning Super Lotto 5 

Misleading Advertisements 5 

Giving Players Information on 

Gamblers Anonymous 6 

Possibility of Amending Act for More 

Legislative and Executive Oversight 6 

After Layoffs, Lottery Will Have Fewer 

Employees than Florida Lottery 7 

Method Used in Determining Cutbacks 

in Personnel 7 

Possibility of Revisiting, Terminating or 
Renegotiating and Rebidding Contracts 8 

Questions by SENATOR LEWIS re: 

Three-year Business Plan for Lottery 9 

Approaches to Increase Lottery Sales 10 

Objection to Lottery Advertisements 11 


Questions by SENATOR HUGHES re: 

Early Retirement Plan Offered to 

Laid Off Employees 12 

Designation of People to Be Laid Off 13 

Number of Laid Off Employees with Prior 

State Service 13 

New Choice of Options in Super 

Lotto Payout 14 

Vendors ' Knowledge of Options 15 

Commitment that Lottery Will Make 

Positive Efforts to Help Education 17 

Questions by SENATOR AYALA re: 

Evidence that Lottery Will Operate 

Efficiently after Layoffs 18 

Prior Need for So Many Extra 

Employees 19 

Questions by SENATOR LEWIS re: 

Financial Rewards to Vendors 21 

Ranking of California's Lottery vs. 

Other States 21 

Questions by CHAIRMAN BURTON re: 

Number of Employees Irrelevant to 

Sale of Tickets 22 

Vendor ' s Cut on Winning Ticket 22 

Money Saved by Laying Off Employees 

in Last Six Month 23 

Cash Option vs. Annuity Option 24 

Advertisements Mention only Annuity 

Amount of Winning . . . 25 

Misleading Billboard Ads 26 

Questions by SENATOR LEWIS re: 

Billboard Advertisements 29 

Questions by SENATOR AYALA re: 

Possibility of Privatizing 

Lottery 29 

Witness in Opposition: 


California State Employees Association 29 

JERRY WAYNE, Lottery Employee 

California State Employees Association 30 

Questions by CHAIRMAN BURTON re: 

Reason for Refusal of CSEA's 

Public Records Request 33 

Benefits of Working with Union 34 

Early Retirement Option 34 

JOAN BRYANT, Bargaining Services Manager 

California State Employees Association 36 

Questions by SENATOR AYALA re: 

Balancing Lottery's Budget through 

Rank and File Employees 37 

Questions by CHAIRMAN BURTON re: 

Concern that Top Administration 

Not Getting Timely Information 38 

Request for Breakdown of 

Supervisors vs. Nonsupervisors Affected 

by Layoffs 40 

Large Number of Layoffs in Sales Force 41 

Questions by SENATOR LEWIS of Union re: 

Lottery Employees' Membership in PERS 43 

Percentage of Lottery Employees with 

Prior State Service 43 

Response by MR. POPEJOY 43 

Number of Laid Off Employees Not 

Benefitted by Early Retirement Option 44 


Questions by SENATOR KNIGHT re: 

Significant Sales Force After Layoffs 45 

Response by MR. WAYNE 45 

Layoffs the Result of Evaluation of 

Management Structure 47 

Body Layoffs vs. Position Layoffs 47 

Motion to Confirm 48 

Committee Action 48 

Termination of Proceedings 49 

Certificate of Reporter 50 

— ooOoo — 

CHAIRMAN BURTON: Item three, William Popejoy. 

MR. POPEJOY: I'm Bill Popejoy/ Chairman Burton, 
and I'm here to seek confirmation as the Director of the 
California State Lottery. 

I've been on the job about one year, or it will 
be a year as of May the 5th, and I came to the Lottery at a time 
when the there was a great deal of proposed legislation to make 
it more efficient, to lower its operating ratio. 

I asked some of the people in this room for a 
chance to let us do it on our own, with our own business plan, 
in a more humane way, hopefully in a way that would make 
Legislators who proposed the legislation to cut back the 
Lottery, hopefully happy. And they gave us a chance. 

So June of last year, we put in place a business 
plan, a three-year business plan that set the Lottery on course 
to, I think, a rather substantial improvement. The most 
important part of that plan would end up at the end of year 
three, which is two years from now, with a quarter of a billion 
dollars more per year for education. That's the object of this 
whole plan, to make more money for education. 

Along the way, in our effort to be more 
efficient, we certainly have changed some people's lives, caused 
some disruption, caused some pain, and I'm aware of that and 
sensitive to it. The Lottery's reduction in force, which I hope 
can be completely absorbed elsewhere in state government, we're 
working towards doing just that, that is our niimber one 


CHAIRMAN BURTON: Do you lay them off before 
they've got a job/ or do you lay them off and hope they find a 

MR. POPE JOY: We notify them about four months 
before the actual layoff. We work with them to get them placed 
elsewhere in government. 

CHAIRMAN BURTON: Do you work with the 

MR. POPE JOY: We work with DPA, with the 
individual departments, and other parts of the administration 
that have openings. 

Mr. Chairman, it's a pro-active program. We have 
a whole list of things that we communicate to our employees to 
tell them what we're doing. 

CHAIRMAN BURTON: How many of the laid off people 
have gotten jobs versus have not gotten jobs? 

MR. POPE JOY: So far, it's too early in the 
process, so very few have gotten jobs and none have been laid 
off. There won't be any layoff effective until the end of June, 
so we're still placing a number of employees along the way. 

We're also able to get — I think it's the only 
time it's been done; if not, it's one of the few times — an 
early retirement program for the people in the Lottery to help 
take the sting out of lay offs. So, some people can opt 
towards -- for early retirement, and hopefully save the jobs of 

At the end of this reduction in force, ' I think 

it's important to note that we will still have more employees 
than any other lottery in the nation. In fact, more employees 
than the largest lottery in the world. So, it's not a matter 
that we're really going below the level that's necessary to 
staff the Lottery. 

I've enjoyed my time at the Lottery. It's nice 
to be part of something that really you can really look back and 
say maybe you made a difference. But my time, hopefully, isn't 
over because my job isn't done. 

Those are the end of my remarks. 

CHAIRMAN BURTON: What do you think about raising 
the age for Lottery tickets? I'm kind of surprised that 18 year 
olds can buy Lottery tickets, to tell you the truth. 

MR. POPE JOY: That was part of the initiative. 
Senator Burton, when the Lottery was formed back in 1984. I 
don't know what the rationale was at that time. 

I haven't given much thought to increasing the 
age. I'm not so sure that I'd be in favor of that, not to 
increase the population of people who are potential players of 
the Lottery. We're not interested — I'm not interested in 
making the Lottery intrusive into the lives of Calif ornians . 
I'd like for it to be pretty much on the edges. 

But if you can ask an 18 year old to go war, I 
suppose you can allow them to play the Lottery. 

CHAIRMT^ BURTON: You can't allow them to have a 
bottle of beer. 

MR. POPE JOY: You can allow them to buy 

CHAIRMAN BURTON: You can't allow them to have a 
bottle of beer. 

MR. POPEJOY: Well, I think since I like beer 
very much, they should wait about three more years for beer. 

CHAIRMAN BURTON: What's your answer to my 
question? You have no opinion? 

MR. POPEJOY: I have an opinion. I think that 18 
years is fine. 

CHAIRMAN BURTON: There is a concern expressed, 
and maybe I'll get somebody from my office to come down, but 
when I met with a group of Indians, they were concerned that the 
Lottery might be hooking up the same type of games that were 
video games. 

Do you have any idea what I'm talking about? 
You're nodding your head; I hope you do. 

MR. POPEJOY: I think I do. There has been some 
concern raised about whether or not a parimutuel slot machine 
type game, which I believe is allowed for the Indians within the 
recently negotiated compact, is something that the Lottery would 
be interested in pursuing. 

I can only speak for myself, and we would not. 
We're not interested in pursuing using that type of game within 
our operation. 

CHAIRMAN BURTON: We're not interested in having 
it pursued either. 

This is like a Ken Maddy question, but the 
Lottery ads kind of lead people to believe that they've got a 
better shot at winning than they really do. Do you think that's 

not necessarily misleading advertising? I guess it is 
misleading maybe with a small "m." 

MR. POPEJOY: Well/ if it's misleading, we should 
correct the ads. We're not interested in misleading the public. 
We print on the tickets their odds of winning. 

CHAIRMAN BURTON: I'm talking about the t.v. and 
that stuff. You know, when people buy the ticket, they've 
bought the ticket. 

MR. POPEJOY: Okay. Well, I don't know what you 
or Senator Maddy is referring to, which ads. The ads that we 
publish have to meet the truth in lending requirements, even 
though we're not subject to the truth in lending requirements. 
We're awfully careful not to be misleading, and still, it's our 
job to try and sell tickets. So, any thoughts you may have on 
how that process can be improved, we're certainly willing and 
interested in hearing. 

I'd be disappointed if it was a common perception 
that we were misleading people with our ads, because that's not 
something we should be doing. 

CHAIRMAN BURTON: I don't think people really 
think that the odds are one in eighteen million to win the Super 
Lotto jackpot. I mean, I don't know if you want to say that's 
the odds or not, but I don't think that's it. 

Do you think it would be beneficial, or that the 
Lottery, either with their ads or maybe on the tickets and web 
site, to inform people, for the want of a better word, about 
Gamblers Anonymous? 

MR. POPEJOY: That's something that we've already 

started, and not as a result of any legislation. It's been 
proposed a couple times. I think last time it was in SB 8, and 
then for some reason it fell out; we didn't fight it. 

But we have voluntarily put in a program, a 
gamble responsibly program, play responsibly program, with an 
800 number to call, and with brochures and referrals for people 
who have a problem with gambling. We're very sensitive to not 
be a contributor to compulsive gambling. 

CHAIRMAN BURTON: The LAO has recommended that 
the Act might be amended for more legislative and executive 
branch oversight of the administrative budget. 

Do you care to comment on that? Are you familiar 
with her recommendations? 

MR. POPE JOY: No, I'm not. 

CHAIRMAN BURTON: Basically she recommended that 
we amend the Act to provide for a little bit more legislative 
oversight, I think, and fiscal, which I would probably interpret 
to mean maybe whether that would be subject to the Budget Act or 
not, I'm not sure. 

All we can do is talk to you like this. Once 
you're confirmed, or once somebody else is appointed, and while 
they're acting or not confirmed, that's the last we can do about 

MR. POPEJOY: Well, I can't. Senator Burton, 
speak for other Lottery Directors, but whatever happens today, I 
think that it's still necessary for the Director to be 
responsive to the concerns of the Legislators. And if they are 
not, or if I am not, then there will be legislation that 

requires you do so. 

I don't think an operation like ours, that's as 
large as ours, as somewhat controversial as ours, even though I 
hope we can keep the controversy to a minimum, should shy away 
from oversight. 

Oversight doesn't bother me. Oversight usually 
increases credibility and believability. So, if more oversight 
was sought, I wouldn't be worried about that. 

CHAIRMAN BURTON: If you have the 215 layoffs 
that are proposed, you'll then be down below Florida. 

MR. POPE JOY: I'm not sure that's true. 

CHAIRMAN BURTON: I'm not sure either, but page 
18 in the document says it's true. 

MR. POPE JOY: I don't have page 18. 

CHAIRMAN BURTON: I'll give it to you. Trust me, 
it's there. 

So, the question would be, Florida, with half the 
population, would have more Lottery employees than us. 

How did you determine the cutbacks in Lottery 
employees? That was a result of us telling you to cut down on 
your administrative costs? 

MR. POPEJOY: Well, certainly that was a 
motivating factor, but the number that we came to was a result 
of looking at every operation of the Lottery, going back to a 
much over used term, zero based accounting, and just basically 
restaffing a hypothetical Lottery as if it was new today to do 
the job that should be done, which would have resulted in many 
fewer employees than we ended up with after the 215 reduction. 


I believe that even after the 215 reduction, 
which I believe takes us about 640, that's about 200 employees 
more than New York, which is the largest lottery in the nation 
by two times our volume. 

And I'm a little surprised even at the Florida 
numbers. My understanding, we're still ahead of Florida, but if 
we're not, fine. 

What we're trying to do is make the Lottery as 
efficient as possible and to create more income for education. 

CHAIRMAN BURTON: One last one for a minute. 

There's been some concern about some of the 
contracts that were entered into prior to your stewardship. Can 
those contracts either be revisited, terminated for cause if 
there's a cause, or certainly not renewed? 

MR. POPE JOY: Well, any contract can be 
revisited. Whether or not you're on legal ground to terminate 
the contract without suffering considerable monetary damage is a 
separate question. 

All of our contracts have a for cause 
termination. The question is, do we have cause to make a 

There were some controversial contracts entered 
into before I came aboard. I'm not interested in trying to sit 
in judgment of those. I will comply with the contracts, and 
when they come up, we will renegotiate. 

I think the controversial nature of the 
contracts — 

CHAIRMAN BURTON: Renegotiate or rebid? 

MR. POPE JOY: No, if I'm here which, I probably 
won't be, because the major one that comes up is in 2003. 

CHAIRMAN BURTON: How long were the contracts' 
duration? What is the normal duration? 

MR. POPE JOY: I believe that contract was the 
high side GTECH contract, was entered into early in 1997, and so 
it goes for about six years. 

But the last part of your question as I 
understood it, would we renegotiate or rebid, I would hope that 
they would rebid. I think major contracts should be bid. 

CHAIRMAN BURTON: Any other Members of the 
Committee. Senator Lewis, then Senator Hughes. 

SENATOR LEWIS: Mr. Popejoy, first of all, 
looking at this same chart that Senator Burton referenced, I 
also see that if these layoffs take place, that the California 
Lottery would still employ more people than New York, 
Washington, and Arizona combined. I guess it's just a question 
of what part of the chart you want to look at. 

I wanted to ask you about your three-year 
business plan. I think you said that at conclusion of three 
years, your goal was to have $250 million more available for 
public education? 

MR. POPEJOY: That's correct. 

SENATOR LEWIS: And the cut for public education, 
is that a third, as I recall? 

MR. POPEJOY: Thirty- four percent at the very 
minimum, plus unclaimed prizes and interest. So, it really runs 
up to about 36 percent. 


SENATOR LEWIS: So, roughly your ticket sales 
would have to go up $750 million a year? 

MR. POPE JOY: That's right; that's correct 

SENATOR LEWIS: To spur that kind of additional 
ticket buying, I guess there's several different ways you can do 
it. You can introduce new games. You can advertise more, or 
perhaps you can increase the size of your jackpots, which might 
lure more people. 

Which of those approaches does your plan 

MR. POPEJOY: All of them. Senator Lewis, but 
with particular reliance upon increasing the size of the 
jackpots. There's no secret on how you get more participation, 
and that is to give the people who play it a greater chance to 

California is right at the bottom of the list of 
pay outs to players. It's one of the worse deals in the nation. 
We're trying make that deal better. 

And it is hard sometimes to persuade Legislators, 
because they deal with percentages, and what we're trying to 
talk about here is, if the percentage goes up and up and up for 
education, but the pot goes down and down and down, education's 
the loser. We think education can be the winner if the 
percentage can be more modest, but more money goes into prizes, 
creating more volume. And the result is a lot more money for 

And with our plan, and it's a plan that's 
one-third along the way now, and it's ahead of schedule. 


basically we're calling for better service to retailers. We're 
calling for more efficient operations so we give a better 
service to our customer. But more importantly, and most 
importantly, we give a better deal to the player, a better 
chance to win. 

SENATOR LEWIS: I think I mentioned this to you 
previously. I have a bit of a bias. I was not a supporter of 
the concept of creating a State Lottery. 

But having said that, you know, as long as 
there's going to be one, it should be officially run; however. 
Senator Burton, I think, touched on one of my concerns, and that 
is those t.v. commercials. I think there's something kind of 
lurid to have the imprimatur of the state urging people, buy 
lottery tickets because you could end up living in this 
luxurious lifestyle, when in fact the odds are one in eighteen 
million, apparently. 

So, I would hope that in your strategies in the 
future, you might rely on other things, other than giving the 
imprimatur of state once again in terms of — 

MR. POPE JOY: We will be sensitive to that. 
Senator Lewis. 

For your information, we've already cut our 
advertising budget quite substantially. It went from 54 million 
to 40 million. Now it's at 29 million. 

CHAIRMAN BURTON: We're talking content, not 
number of ads. 

MR. POPE JOY: Pardon me? 

CHAIRMAN BURTON: We're talking content of the 


ad, not the number of the ads. 

MR. POPE JOY: Okay, fine. I understand. 

SENATOR LEWIS: Thank you. 

CHAIRMAN BURTON: Senator Hughes. 

SENATOR HUGHES: Mr. Pope joy, could you explain 
to me what the early retirement plan that you have for the 
employees is. 

MR. POPE JOY: What we have right now — 

SENATOR HUGHES: What kinds of choices they have, 
if any? 

MR. POPE JOY: Yes, Senator Hughes. 

The plan basically moved forward your time in 
service by two years. It doesn't move forward your age, but it 
moves forward your time in service by two years. 

So, if you were two years from retirement now, 
you can take early retirement. And if you were one year, then 
you'd be over a year, and you'd have a little more lucrative 
retirement. So, basically what it does is advance your time in 
service, state service, by two years. 

That affects a number of our employees, 
particularly with the Lottery, because the Lottery was formed 
about 13 years ago, and many of our employees have eight, nine 
years of service. So, they're within striking distance of early 
retirement should they choose that route, and we understand a 
number of them will. 

SENATOR HUGHES: There are about 215 people whom 
you will be encouraging to retire, or 215 people that .you would 
be laying off? 


MR. POPEJOY: The reduction of force will be 215, 
Senator Hughes. My understanding is that about 15 percent of 
our workforce is eligible — no, almost 20 percent of our 
workforce would be eligible under the early retirement program. 

Whether or not they would choose — it's strictly 
voluntary — for early retirement remains to be seen. I 
wouldn't want to leave the Committee with the feeling that if 
everyone chose early retirement, we wouldn't have a layoff, 
because that isn't so. All it will do is take some of the bite 
out of the layoff. 

We have to work real hard, and we are working 
hard at getting employees placed elsewhere in state government 
if they wish. 

SENATOR HUGHES: Of the 215 people, they probably 
haven't been designated yet. This is just a number that you 
have in mind? 


SENATOR HUGHES: They have been designated? 

MR. POPEJOY: Yes, they have been designated. 

SENATOR HUGHES: Of these 215 people, how many of 
these people were in prior state service? Do you have any idea? 

MR. POPEJOY: I don't. Senator Hughes, but I 
would doubt if many of them were, because they probably, if they 
had prior state service, they had high enough on the seniority 
list, they wouldn't be affected by the layoff. But that's a 
guess, and I hope an educated guess, but not really a concrete 

SENATOR HUGHES: Could you find that information 


out for me? 

MR. POPE JOY: Yes, ma'am. 

SENATOR HUGHES: I would be interested in that. 

The other thing I want to ask, recently you have 
changed the choices of players to make a determination as to 
whether they want to get their prize money in a shorter period 
of time or in a longer period of time. 

Would you please explain it to me? I really 
don't understand it. 

MR. POPE JOY: Okay. One of the things, going 
back to Senator Lewis's question, what are you doing to make the 
Lottery sell more tickets? I said one of the things we're 
trying to do is make the game more attractive, the games more 
attractive; make your chances of winning greater. 

We've noticed in other states where they offer 
the equivalent of our Super Lotto, that their ticket sales have 
been sort of the going down over the years. And they've been 
able to reverse the trend when they offered cash options. They 
found out a sizeable part of the population are at an age that 
they don't want to be paid out over 25 or 30 years. They want 
the money now. 

In fact, it's interesting to maybe observe that 
the huge jackpot we had recently, the $102 million jackpot, we 
had three willing tickets. All three chose the cash option. 
It's proven to be a very popular thing with the players. 

So, we're trying to make the game more 
attractive, more fun, and more meaningful to people who play. 

SENATOR HUGHES: But then also by doing that, you 


make more money available to invest for the Lottery? 

MR. POPEJOY: No, really, the Lottery doesn't 
make any money one way or the other. 

SENATOR HUGHES: But don't you take some of that 
money and invest it in things to try to get more money for the 
future to keep the Lottery Commission going? 

That's just a question. I'm not asserting that; 
I'm asking. 

MR. POPEJOY: No, I understand. It's a question 
that's been asked before, and it'll take time before we really 
can communicate that the Lottery doesn't make more money one way 
or the other. 

If you choose cash or 26-year annuity, the 
Lottery's circumstance is the same. If you choose cash, we give 
you the cash. If you say, okay, I want a 26-year annuity, we 
take that cash and invest it in your behalf in Treasury 
obligations for 26 years. So, we basically are ambivalent which 
way you go. 

SENATOR HUGHES: Do you think that the players 
are totally aware of what your new system brings to them 
immediately or in the long run? Because I went to one place, 
and the gentleman said, well, we don't have this new choice 

Did you try to start it all over the state 
simultaneously, at the same time? Why would one vendor say that 
players didn't have that option when it had been advertised that 
they did? 

MR. POPEJOY: I have no explanation. We have 


19/375 vendors. They have probably on an average of nearly six 
employees with a good deal of turnover. And I think that, like 
most business people, they do a good job as best as they can, 
but the information you heard was absolutely in error. 

It'll take time. We've sent out all sorts of 
pieces of information to our vendors, our retailers. We have 
our sales force working with the retailers. 

I think the level of awareness pretty good when 
you consider 44 percent choose cash options, but we've received. 
Senator Hughes, all sorts of information where people said, hey, 
I was told I had to take cash, or I was told I to take the 
26-year annuity. And that's just a matter of educating the 
retailers to make sure that the people know they have an option. 

One of the nice things about the huge jackpot, 
the education program was really accelerated because there was a 
great deal of focus on, I can choose cash, or I can choose 

SENATOR HUGHES: So, this vendor told a 
constituent of mine that his machine, his computer, was not set 
up to make that choice yet. So, that was an untruth and not the 

MR. POPE JOY: That's correct. 

SENATOR HUGHES: So, all the computers were set 
up to do that already? 

MR. POPE JOY: Well — 

SENATOR HUGHES: This was a gas station. 

MR. POPEJOY: With 19,375 retailers, there may 
have been one out there whose machine wouldn't handle this, but 


I don't think that was the case. 

SENATOR HUGHES: But it would not have been to 
the advantage of the vendor anyway? 

MR. POPE JOY: None. No advantage whatsoever. 
All they do. Senator Hughes, is ask cash or annuity, and make a 
designation one way or the other. They have to fill out one or 
the other. And if nothing's filled out, it automatically goes to 

SENATOR HUGHES: In the Orange County bankruptcy 
situation, you played a major role. 

Are you going to see that our schools are not 
bankrupt any more, and that the Lottery Commission is going to 
make every positive effort to see that we can help with 
education dollars more? 

MR. POPE JOY: Well, the fun part of this job is 
that I really do feel part of something that is making a 
contribution. I don't mean to sound like a do-gooder, but I'm 
at a point in my life that I would like to be involved with 
things that I'm proud of. 

The unfortunate part of the Lottery's efforts, 
even after we go to a billion dollars, and we will, that that 
represents — will represent, on a projected basis, about two 
percent of the budget for K through 16 — no, we go K through 
14, we go through junior college. 

And it just really is hard for the people in the 
education community to feel that it makes a difference. It 
would be nice over time, and this would be well beyond my time 
as the Director, if we could revisit how the money is used. 


In other states it's used, for example/ for 
scholarships/ and they're called Hope Scholarships. In Georgia/ 
I believe over 80 percent of the incoming freshmen are on Hope 
Scholarships funded by the Lottery. And you can really tell 
where it makes a difference. 

But we have such a huge state/ and our budget's 
so large for education/ that even though we will make the 
Lottery a lot more productive/ a lot more profitable for 
education/ it's still going to be a small piece of the education 


CHAIRMAN BURTON: Senator Ayala. 

SENATOR AYALA: Mr. Pope joy/ I don't want to go 
over plowed ground. I think they covered the subject matter 
pretty good. 

I'd like to ask you about the decrease of Lottery 
staff by the end of this fiscal year. I'm not one of those that 
believe that government's in the business to provide jobs. I 
think that government's in the business to create a climate 
whereby industry and commercial development take place to create 
jobs. We have to hire some people because there's some service 
they've got to provide. 

SO/ I'm not all that concerned about this issue, 
except that I want to make sure that the work itself/ you have 
evidence that the Lottery program will continue as well or 
better in the years to come with a reduction of personnel? Do 
you have evidence to that effect? 

MR. POPE JOY: Well/ we have projections, and you 


know how weak they can be, Senator Ayala. We have evidence from 
other states where we're duplicating their programs and do the 
same work with fewer people. 

The reason we've been able to move so quickly, we 
went to other states, particularly New York and Ohio, and we 
copied what they're doing. Their systems, their equipment, 
largely emulated what they're doing so we can be more 
efficient. They're more efficient than us. 

There's no guarantees that I would try to make 
you regarding the future. I'm very confident that our programs 
will probably over perform our estimates, and early indications 
are just that. But my crystal ball sometimes has been cracked. 

We've asked our people at the Lottery to 
basically plow their fields with work horses, and basically 
we're giving them tractors. We're giving them tools so they can 
be more efficient. 

SENATOR AYALA: Are you suggesting that prior 
Directors were over populated with employees to the extent of 
215, and you find that they were doing what? Not much of 
anything? So, you've got to get more close to the bone, so to 
speak, with the number of employees. 

As I said earlier, I'm not one of those that 
feels that government must provide jobs for people. I think 
that the duty of government is to provide the climate whereby 
industry and commercial development to provide jobs. Of course, 
we've got to hire people to provide some services. 

So, I'm not all that concerned about this lack of 
people being dismissed, or are being dismissed, 25 percent. 


Again, I'm concerned that the evidence that you 
have will project to just efficient or better job by the Lottery 
than we're doing today. 

MR. POPEJOY: Yes, all of our evidence, all of 
our analysis, would indicate that we'll be able to do a much 
better job, higher volume, with fewer people. 

That doesn't mean the people who were here in the 
past didn't work. It just means we've been able to utilize 
better automation, better technology, systems that require fewer 

So, I have every confidence that we will be able 
to do a better job than we are doing now, with 800-some 
employees, when we're down to around 615, a better job. 

SENATOR AYALA: Two hundred fifteen employees is 
an awful lot of employees to just let hang on there by prior 

MR. POPEJOY: I'm not so sure. Senator Ayala, . 
that they just hung on. 

We've taken since last June to put in. new 
systems, to adapt new technology, to use new computer systems, 
and we're still implementing that, that allows us to do more 
work with fewer people. 

And the real nice part of the story from my 
standpoint, I don't like to see people lose their jobs either, 
but those savings, particularly if we can absorb the people 
elsewhere in state government, and that's our objective. 

SENATOR AYALA: Innovations created the less need 
for these employees? 


MR. POPE JOY: Yes, absolutely. 

SENATOR LEWIS: In furtherance of one of the 
questions Senator Hughes had about the vendors receiving some 
kind of financial reward, on the sale of a Super Lotto ticket, 
doesn't the establishment get some kind of a cut or reward for 
selling the winning ticket? 

MR. POPEJOY: The retailer? Yes, they get a lot 
more than we get. They get 6.6 percent on average; 6 percent 
when they sell the ticket. Then when they redeem tickets, the 
total payment percentage-wise to our retailers is 6.6 percent. 

SENATOR LEWIS: On that 6.6 percent payout, are 
they affected at all by how the player of the Lotto chooses? 

MR. POPEJOY: No, none whatsoever. None 

SENATOR LEWIS: Just the other question is, is 
California the largest lottery in the country? Is our Lottery 
the largest in the country? 

MR. POPEJOY: No, sir. Senator, I believe it's 
the fifth largest. 

SENATOR LEWIS: The fifth largest? 

MR. POPEJOY: That's correct. I believe that New 
York, Texas, Ohio, Georgia, are ahead of us, and maybe Michigan. 

SENATOR LEWIS: Is that one of the reasons that 
you might have been looking at streamlining the operation? 

MR. POPEJOY: Absolutely. We went and watched to 
see what they were doing. 

SENATOR LEWIS: Fifth largest, but we had the 
most employees? 


MR. POPEJOY: Well, you know, we were the largest 
number of employees by far, and I thought we still were the 
largest number, but that wasn't our objective. But we are the 
fifth largest in terms of sales volume. 

SENATOR LEWIS: Thank you. 

CHAIRMAN BURTON: I would think the number of 
employees is irrelevant to whether people buy Lottery tickets or 
not. I think that you may have been, because there was a bill 
to have you reduce your overhead, your administrative costs or 
something, that may have led to some review and downsizing. But 
you could hire 55,000 more people, or fire everybody you've got, 
and I don't really know whether that's going to affect whether 
people buy a ticket or not. 

I think they buy it off the advertising and the 
word of mouth. 

On that 6.6 percent, so if somebody sold the 
winning Super Lotto ticket, and it was $100 million, they pick 
up 6 million? 

MR. POPEJOY: No, it doesn't work that way. If 
they sold a ticket, and it was a one dollar ticket, they have 
6.6 cents. 

CHAIRMAN BURTON: Then don't they get a hit out 
of a big winning ticket? 

MR. POPEJOY: They get a bonus, but it's nothing. 

May I respond to your earlier observation when 
you indicated that if you have a whole lot of employees or a few 
employees -- 

CHAIRMAN BURTON: I don't think that's relevant. 


In other wordS/ laying off employees won't increase sales; 
hiring ten more, I don't think, will increase them. 

MR. POPE JOY: That would be a reasonable 
observation, but what we've done — 

CHAIRMAN BURTON: I pride myself in being a 
reasonable person. 

MR. POPE JOY: What we've done. Senator Burton, is 
take the savings from our administration and add that to our 
prize pool, and that's what's driving the sales. 

In other words, we're taking the money we're 
saving out of running the Lottery and putting it in the prize 
pool, giving the players a better chance to win. 

CHAIRMAN BURTON: How much money have you saved 
in laying off people in the last six months? 

MR. POPE JOY: None. 

CHAIRMAN BURTON: So what are you saying, you're 
saving money. 

MR. POPE JOY: We've saved money by cutting 
advertising budgets and cutting budgets in nonpersonnel areas. 
We can't lay people off within six months. It takes about nine 
months to lay people off under the state and union rules. 

CHAIRMAN BURTON: How much have you saved that 
drove the prize thing up? 

MR. POPEJOY: About $30 million. 


MR. POPEJOY: Over one year. 

CHAIRMAN BURTON: Was that from the advertising? 

MR. POPEJOY: A lot of it from the advertising. 


CHAIRMAN BURTON: One other question. It would 
seem, and maybe I didn't answer, and then we'll hear from the 
opposition, but it would seem if somebody wins 10 million cash, 
they get 10 million cash. If they do it in annuity, the Lottery 
has to put a lot less money into the pot to have it end up same 
amount of money at the end of the term, right? 

MR. POPEJOY: No, sir. If you collected 10 
million in cash, you chose the cash option, if you said, okay I 
really didn't want the cash option/ assuming you could change, I 
want it paid over 26 years, we would pay you approximately $20 
million over 20 years. How we got the 20 million is, take the 
10 million in cash and invest it. 

CHAIRMAN BURTON: If you take a pay-off over a 
longer period, you will get more money? In other words, the 
Lottery is investing it for — 

MR. POPEJOY: That's correct. We invest it on 
your behalf. 

CHAIRMAN BURTON: Why would you do that? 

MR. POPEJOY: Because that's the way annuities 
work. You take a certain amount of money at the front end. You 
invest it for, in our case, 26 years, and it pays out a greater 
amount because you get a combination of — 

CHAIRMAN BURTON: In baseball contracts when 
they're doing that, they're investing a smaller amount of money 
in front. As the annuity grows, that brings the money in. 

So basically, if they won 10 million, you're 
saying if they won 10 million, we're investing the money for 


What benefit is it to us to do that? 

MR. POPE JOY: None, none. It's strictly a 
benefit to the player. 

SENATOR LEWIS: That's not a detriment, either. 

MR. POPE JOY: No, no. We're neutral. We 
couldn't care less. 

CHAIRMAN BURTON: It just seems kind of odd. 

MR. POPE JOY: Well, we're trying to attract, as I 
mentioned earlier. Senator Burton, as wide an audience of 
player-ship as possible. We've found out when we had only the 
20-year payout, which we changed to 26 years, that we would — 
certain players, potential players, just weren't interested, and 
they particularly were senior citizens. They said, why do I 
need to be paid over 20 years or 26 years if I'm 60 years old? 

CHAIRMAN BURTON: That's when you went to cash. 

MR. POPE JOY: That's right. 

CHAIRMAN BURTON: But when you advertise the win 
the amount, you advertise one dollar amount. You don't say, if 
you win, you get $10 million, but if you take it over 26 years, 
you get 22 million. 

MR. POPE JOY: We advertise the amount you get 
paid over 26 years. That's required by the Lottery. 

CHAIRMAN BURTON: So, you say that if you win, 
you get either 10 million or 26 million, which ever way you pick 

MR. POPE JOY: No. I don't know where the 26 
million came in — 

CHAIRMAN BURTON: I was just using a figure, that 


if you took the 10 million and put it in government bonds, and 
you ended up with 26 or 27. 

MR. POPEJOY: I think it's better to describe, if 
you see the sign on Highway 5 as you go towards the airport, and 
it's flashing $20 million, and you decide you want to win, and 
you choose the cash option, you will get approximately $10 
million. If you decide you want to be paid over 26 years, then 
you will get exactly $20 million over 26 years. 

CHAIRMAN BURTON: So, that's rather misleading 

MR. POPEJOY: I don't think so. It isn't meant 
to be. We advertise the 26-year pay out, but you have the 
option of taking — 

CHAIRMAN BURTON: Does the billboard say $26 
million over 20 years, or does it say $26 million flat? 

SENATOR HUGHES: The ticket, you make a choice on 
the ticket. That's what I have been asking about. 

CHAIRMAN BURTON: No, but what I'm saying is, the 
billboard gives you the top — 

MR. POPEJOY: The 26-year payout. 

CHAIRMAN BURTON: Right, but I mean, so I walk in 
there in theory, but does the billboard say $20 million over 26 


CHAIRMAN BURTON: I think that's misleading. No 
big deal, but it's misleading. 

SENATOR LEWIS: Maybe you should have a giant 


MR. POPEJOY: If it's misleading, we should take 
a look at it. We don't want to do things that are misleading 

CHAIRMAN BURTON: You don't think it's 

I don't know much about Lottery, and I either 
know more or less than people in my neighborhood who go down to 
Tony's Market and buy a ticket. But it would seem to me, if it 
said 20 million, I kind of have the thought I could walk in, if 
I hit, I have $20 million, not 10. 

MR. POPEJOY: Well, then we should do a better 
job of advertising, particularly if you buy a ticket. 

What we did was look at other states where they 
have introduced the cash option, and tried to emulate everything 
they did to avoid problems that they experienced. So, we were 
very careful in trying to introduce a program that contemplated 
the problems that may come up, but it's still a learning 

If it's felt that those signs are misleading, 
then maybe we ought to look — 

CHAIRMAN BURTON: It seems to me, it doesn't say 
20 million over 26 years. It says 20 million. I think I win 20 
million when I hit the numbers. 

MR. POPEJOY: I understand what you're saying. 

CHAIRMAN BURTON: Does it make any sense, what 

I'm saying? 

MR. POPEJOY: It does make some sense, yes. 
CHAIRM7\N BURTON: I think it makes a -hell of a 

lot of sense. 


MR. POPE JOY: Today, Senator Burton, everything 
you say makes a lot of sense. 

[Laughter. ] 

CHAIRMAN BURTON: Well, my sense of humor is not 
that good. 

MR. POPE JOY: I don't mean to offend you, but 
your observation does make sense. 

What we tried to do is respond to a demand from 
the players. And we'll be fine-tuning this game and our 

CHAIRMAN BURTON: The player demanded that you 
put up a number that they can get over 2 6 years without saying 
it's over 26 years? 

MR. POPE JOY: The players did not demand that, 

CHAIRMAN BURTON: But then you're telling me that 
you are responding to a demand of the players, with the subject 
matter we're discussing, where the players never even mentioned 
it in their dreams. 

MR. POPE JOY: I don't know what the players 
mentioned in their dreams. We tried very carefully — 

CHAIRMAN BURTON: I know what I mention in my 
dreams, and you ain't doing yourself much good with me, for what 
the hell that's worth, sir. 

Let's hear from the opposition. 

SENATOR LEWIS: May I follow up? 

SENATOR AYALA: I have one more question, Mr. 


SENATOR LEWIS: I think the point that's being 
made is somewhat valid. I mean, how difficult would it be to 
put on the bottom of a billboard, paid over 2 6 years? 

MR. POPE JOY: No problem whatsoever. 

SENATOR LEWIS: Is that something you will 


MR. POPEJOY: Certainly, certainly. 
SENATOR AYALA: I have one question. 
CHAIRMAN BURTON: Senator Ayala and then 


SENATOR AYALA: Mr. Pope joy, is it your plan to 
privatize the Lottery system during your tenure? 


SENATOR AYALA: It is not your intent to 
privatize the Lottery system? 

MR. POPEJOY: No. That would take five or ten 
years, and that's not reasonable for me to even contemplate. 

SENATOR AYALA: Thank you. 

MS. GOLDEN: Good afternoon, Mr. Chairman and 
Members. Sherrie Golden, representing the California State 
Employees Association. 

We don't appear before this Committee too much. 
Unfortunately today, we are here to oppose Mr. Popejoy's 
confirmation. Since he has been the Director, we have lots of 
problems with the Lottery. Mr. Wayne is a Lottery employee; 
I'll let him go on to discuss those in detail. 

There's been contracting out. We have a 44-page 
unfair we filed against the Lottery. 


And in talking about the people who are there for 
layoffs, we're in the bargaining process right now, and it seems 
to me that should have been part of the bargaining process. If 
you want to lay off 215 people, why didn't you do it through the 
bargaining process? The Governor wants enough through the 
bargaining process. Now he's going to get that, plus 215 

I think the message that was sent to the Lottery 
was to do some rearranging; to look at your administrative 
costs; to look at ways you could save money. Some how, that's 
resulted in 215 people leaving, and 215 people, whether they get 
another job or not, we don't know. I don't know if they're 
ready for early retirement, nor can they afford early 
retirement. It's very disruptive, and we just don't think it 
was necessary. 

And I don't think that the Director looked very 
hard at the picture. I think he could have chosen some 
different options. 

So, we find this very upsetting, especially for 
people who have been in a state of not having pay raises for the 
last four years. 

So, I will turn this over to Mr. Wayne. He works 
at the Lottery, and he can answer some of the questions I'm sure 
that you have. 

Thank you. 

MR. WAYNE: The first thing I'd like to do is 
thank the Committee for allowing me to speak and tell you right 
now, I understand how David felt going against Goliath'. 


Anyway, I believe that Mr. Popejoy should not be 
confirmed as the Lottery Director for a number of reasons. 

First, for many of his decisions that have been 
made at the expense of Lottery revenue. Briefly, these 
decisions include a cap on the retailer network, termination of 
subscription play. Every other week telemarketing calls creates 
out of stock problems. The scratcher ticket and the auto-ship 
or forced ship program to retailers, which will send them 
tickets they may or may not want, which is confusing and 
disruptive to the retailers. 

Being a district sales rep, and working with 
approximately a hundred retailers, that's been a complaint of 
the retailer. 

These decisions, among others, indicate his 
inability to run the Lottery in a fiscally sound manner. 

It is agreed, and I agree, and I think most of 
the people in the Lottery agree, that Lottery operating expenses 
must be reduced, but waste is not at the rank and file level as 
Mr. Popejoy believes. Rather, it's at the management level. 

The Lottery did not comply with a public records 
request from CSEA to allow us to review the worksheets used by 
management under Mr. Popejoy 's direction in his decision to make 
215 mostly rank and file job cuts. CSEA sought to review these 
worksheets in order to determine why hardly any cuts were made 
in management. And conversely, a number of managers were 
promoted. And why the Lottery's spending on vendor services 
will apparently continue unabated, despite a litany of 


Given the prospect of massive layoffs, employee 
morale is at an all-time low. The rank and file employees 
apparently understand what Mr. Popejoy does not. Specifically, 
that eliminating 215 full time mostly rank and file positions, 
30 percent of the workforce, will greatly weaken the Lottery. 

Moreover, the merger of four district offices, 
eliminating 40 state sales reps and all district warehouse 
personnel, will weaken the retailer network. Decreasing workers 
at the district level and increasing supervisors will increase 
redundancy and expenses, a shell game at best, and dishonest at 

With reduced staff, the Lottery will not be able 
to run efficiently and effectively, and the result will be less 
retailer service and reduced sales. With reduced sales, the 
layoffs will have done nothing to reduce expenses, and the 
downward spiral will continue. 

The biggest loser will be the schools, who will 
get less revenue. 

Now, Mr. Popejoy, the other thing while you're 
here, we met, as you remember, July 23rd, 1997. There was a 
labor-management meeting, and I was present, as Rosemary Duffy, 
Carl Arnellis, and Diana Gallegar from the union side. 

You mentioned to us at that meeting that you were 
a union steward, if I remember right, for Aero Jet General. 

MR. POPEJOY: That's right. 

MR. WAYNE: And a football coach. 

MR. POPEJOY: No, I wasn't a football coach. 

MR. WAYNE: You told us at that meeting, and 


there were other people there besides myself, that there would 
not be substantial layoffs at the Lottery, maybe a little 

So, we are perplexed, surprised, and shocked by 
your actions in view of the fact of what you told us at that 

I thank the Committee for their time, and I 
entertain you questions. I hope I can answer them. 

CHAIRMAN BURTON: Couple questions. 

What was the reason for refusal of the public 
records request that the employees had? 

MR. POPE JOY: I found out about it last Thursday 
because I didn't know what they were referring to when they 
mentioned that we didn't comply with this request. And that did 
concern me greatly. 

And in checking into it, there was a request last 
October, I believe, for information about work in process. We 
didn't have conclusive papers. They wanted things that were 
working papers, and we said no, we're not done. In fact, our 
first cut-back in October, when we submitted what was called a 
Bridge Plan, Senator Burton, was for 230-some employees, and the 
final plan that finally was approved by DPA was 215 employees. 

As soon as we finalized the plan, because it kept 
changing, we gave them the documents. 

But I don't believe we ever refused any request 
for final documents. Documents in process that weren't 
completed and were not conclusive and may be misleading were not 


CHAIRMAN BURTON: Wouldn't it be maybe better if 
you're thinking of doing something that affects the workforce 
and peoples' lives, that as you're going through it, you work 
with them? They may come up with some suggestions before it's 
finalized that you may accept, may reject, or may make sense to 
you and say, yeah, yeah, we could save money and do it that way. 

MR. POPE JOY: Absolutely, and I believe that was 
done. I believe that we did work with our employees. In fact, 
in June of last year, I sent out a letter that followed a 
meeting with the employees that said, basically, ask Bill. 
Just — I even said, send us information anonymously if you 

The idea of early retirement came from our 
employees. It didn't come from our management. 

By the way, let me mention something — 

CHAIRMAN BURTON: What didn't come from 
management? The layoffs? 

MR. POPE JOY: No, the early retirement. In other 
words, see if you can get early retirement for our employees. 
That came from the employees. That didn't come from management. 

CHAIRMAN BURTON: Early retirement, somebody 
who's been on the job ten years, unless they're close to 
60-something years old, ain't much of a deal. 

MR. POPE JOY: Well, our people are pretty happy 
with that. We have a number of people that are very pleased. 

CHAIRMAN BURTON: It's better than a jab in the 
eye with a sharp stick, but it's not a consumation devoutly to 
be wished, I don't think. 


MR. POPE JOY: I don't know. I'm not the person 
who is seeking early retirement, but I'm just suggesting to you 
that it seems to be very important for our employees. 

CHAIRMAN BURTON: It was better than being thrown 
out in the street, clearly. 

MR. POPE JOY: I think it's a lot better than 
being thrown out in the street. 

CHAIRMAN BURTON: As you explained it, early 
retirement means you can retire early, I guess, so you're adding 
two years of service, or two years to their age? 

MR. POPE JOY: Just two years of service. But if 
you're two years away from having the required number of years 
to vest, it makes a big difference. 

CHAIRMAN BURTON: Well, vesting and retirement 
are two different things; aren't they? 

MR. POPE JOY: This is early retirement. It's my 
understanding they can retire — 

CHAIRMAN BURTON: They can retire with it. You 
can retire at 50 with 11 years' service? 

MR. POPE JOY: I don't know what the age 
requirement is. 

CHAIRMAN BURTON: That would be important; 
wouldn't it? 

MR. POPE JOY: I don't have the answer. 

CHAIRMAN BURTON: What would be the answer? 

MR. WAYNE: Our personnel department came down 
and told us that the two years were not for age but just time. 
So, and you have to be 50 to retire. You must be 50 by state 


law to retire. 

I'm really not clear or sure, based on what our 
personnel department tells, if you were 48, that you would get 
the two years to 50. I think that has to be researched. 

MR. BRYANT: Senator Burton and Committee, my 
name is Joan Bryant. I'm the Bargaining Services Manager 
California State Employees Association. 

I would like to bring to the Committee's 
attention that while the two years is being added, many 
employees who were hired since 1990 must put in 10 years of 
service before they retirement vest. So, this is not going to 
be of benefit to a great majority of the employees who may be 
laid off. 

One of the other issues that I would like to 
address that Mr. Pope joy talks about, we have a Labor Management 
Committee, and the purpose of that committee is to talk about 
issues before they become problems and to offer solutions. So, 
when information is denied to us, then we cannot offer solutions 
to that problem. 

And when he talks about the Bridging Program, 
this is where workers contracted out to GTECH, and the employees 
that are about to be laid off now are employees that were 
absorbed into the system, and we were told that would not be 
laid off. 

Now, we are back some months later, and 215 
positions are going to be gone. I might add that 215 positions 
may equate to more than 215 employees, because sometimes people 
are working part-time, and so two people might occupy one 



CHAIRMAN BURTON: Senator Ayala. 

SENATOR AYALA: How do you respond to the charge 
that you are trying to somewhat balance the budget of your 
department through the rank and file level, where the problem 
has to be on the managerial area? How do you respond to that 

MR. POPE JOY: I think that that comment that was 
made, maybe based on misinformation, is terribly misleading. 

My understanding, the supervisor to 
non-supervisor ratio will be almost identical before the layoff 
and after the layoff. We're very sensitive to having — well, 
that's the data that I have, and I'm very concerned about 
anything to the contrary. So, I believe that data's correct, 
that the ratio of supervisor to non-supervisor personnel is 
almost identical before and after. Not identical, but almost, 
very close. I think it's eight-tenths of one percent 

SENATOR AYALA: So you don't agree with that 

MR. POPE JOY: No, I don't. We will supply the 

We're not interested in doing things that are 
inaccurate, things that are done in the dark of night. 

The data that we have, like this so-called 
request for information, it was never brought to my attention 
until last Thursday. 

I'm just saying. Senator, that I'm willing to do 


anything to be fair. I've been on the other side of layoffs. I 
have worked with a union. I worked my way through college 
working the swing shift in a union. I'm very concerned with the 
working person. 

And the so-called royalty looking down on the 
working people, we are not going to have that at the Lottery. 
The Lottery is going to be cut across lines, supervisor and 
supervised, on an even and on a fair basis. 

CHAIRMAN BURTON: Let me tell you what concerns 
me, and this is not unlike something we had with a couple people 
in Corrections. 

You have an issue that's very important, because 
you're going to be laying off people. That usually doesn't 
happen — like everybody says, that's a hell of a deal — and 
nobody thought to bring to your attention until Thursday a 
request for information about that issue. 

That's a bigger concern to me that whoever you've 
got underneath you didn't figure. 

It was like that deal when they didn't pass 
something up the line at that prison. That's a real problem. 

In other words, you've got people there that 
didn't say, Jesus, Pope, here we've got this problem and what 
should we do about this, and you find out about it two days 
before you're coming before us. 

That's not your fault — I mean, it's your fault 
in a way — but it's the fault of the people underneath, that 
they're so insensitive both to them and to you that they figure 
no big deal . 


MR. POPE JOY: I don't think that — I don't think 
after the meetings I've had with people that work with me, that 
they would be insensitive to that. 

CHAIRMAN BURTON: You first heard about it last 
Thursday. Somebody, if they weren't insensitive, they were 

MR. POPE JOY: Senator, the request, as I 
understand it, even though it was recent information for me, was 
one that was given to DPA for a judgment, should we give 
information that is incomplete. 

We've already shared in public meeting about 40 
pages of detail. Should we give information that's incomplete 
at this point. In fact, it may indicate to people that they 
think are going to get laid off and they won't be laid off, or 
to people who think they're not going to be laid off, they are 
going to be laid off, because the process hadn't been 

By the way, we gave this information to them four 
months ago. No Union representative ever came to me, and 
they're welcome to give me a phone call, the same meeting that 
someone's talking about, I said, any time you've got a problem, 
please call me. And they've never done that. 

I don't think this was a big problem. I don't 
think it was a legitimate request, because you can't ask for 
someone to give you an in-process request for information that 
is incomplete, and might even be misleading. 

CHAIRMAN BURTON: We may differ on that. 

So, are you going to be able to give us a list of 


line personnel versus supervisor personnel? 

MR. POPEJOY: Yes, sir. 

CHAIRMAN BURTON: Not necessarily by names, but 
by numbers. 

MR. POPEJOY: Percentage. 

CHAIRMAN BURTON: Here's a breakdown of the 215: ' 
district sales reps, office techs, program techs, material and 
store specialist, stock clerks, computer operators, government 
program analysis, staff services analysis, telemarketing. 

I don't see any supervisors here at all, unless 
the stock clerks are supervisors. 

MR. WAYNE: Senator Burton, may I speak on that 

CHAIRMAN BURTON: I was asking him. 

MR. WAYNE: Right. I just wanted to answer 
something, a comment he mentioned. 

CHAIRMAN BURTON: I guess, but anyway, I think 
most of them are right there. We can give you that. 

So, that doesn't bode well for whatever the 
comment was . 

They're also laying off sales reps and district 
reps. I assume sales reps go around, try to hustle up sites or 

MR. POPEJOY: Well, they do that, and they also 
— they're our primary contact with the retailer network. 

CHAIRMAN BURTON: So, we're laying off the people 
that hustle the product. 

MR. POPEJOY: Many of them, yes, sir. ' 


CHAIRMAN BURTON: Forty of them. 

District warehouse personnel, I have no idea what 
that might be. 

I'd like to know who you're keeping, because 
those are the people — that's not being in the liquor business 
and laying off the people who go around to the bars and the 
restaurants, trying to get people to stock your product. 

MR. POPE JOY: One of the comments the gentleman 
made was that we're not doing as well for education. 

CHAIRMAN BURTON: I'm asking a question. I don't 
want to hear your comment to his that you're not doing as well 
for education. 

MR. POPEJOY: I'm trying to tell you why we did 
what we did, and how we're trying to make it more efficient. 

The California State Lottery, before this lay 
off, had more people in its sales and marketing division than 
they had in the entire state lottery for the State of New York, 
and its lottery is twice as big as ours. Just our sales 
operation. We were over staffed, inefficient, wasting money, 
wasting money for education. 

CHAIRMAN BURTON: That's why you got rid of the 
sales force. 

MR. POPEJOY: Got rid of some of the sales force. 
We have plenty left. We still more — we still have a larger 
sales force than any sales force in the nation, and we're the 
fifth largest operator. 

CHAIRMAN BURTON: Is all this based on the same 
information, that we still have the largest workforce after 


these layoffs than anybody, until we start looking at Florida? 

MR. POPE JOY: The Florida numbers I'd like to 
understand better. 

CHAIRMAN BURTON: I'd like to understand these 
numbers better, where you say there's a little devaluation of 
the currency, where we have layoffs that look like we're laying 
off a lot more worker bees than we are supervisor bees. 

MR. POPE JOY: What you see are the people who are 
actually leaving the Lottery. What you don't see are the people 
who bump down through the ranks. People who go from supervisor 
to nonsupervisor . 

CHAIRMAN BURTON: Senator Lewis. 

SENATOR LEWIS: Looking at the chart on page 17, 
which I don't think you have, Mr. Popejoy, when you add up those 
categories, it comes to 141. Whoever laid out this chart does 
not detail all of them. 

SENATOR HUGHES: Excuse me, I think you've got 
wrong chart. Do you have page 31? Try page 31. You've got 174 
sales reps. And now with the 40 he's reducing, it will still 
leave him 134. It's page 31. He has 174 now, and it's going to 
134. That's where the 40 come in. 

MS. TANENBAUM: This is an outline that adds up 
to 215. 

SENATOR LEWIS: How many of these are 
supervisorial versus nonsupervisorial? 

SENATOR HUGHES: Are the sales reps considered 

MR. WAYNE: Rank and file. 


SENATOR LEWIS: We're getting afield. I 
mentioned the chart on page 11, because that was what Senator 
Burton was referencing. I wanted to bring it to your attention 
that that particular chart only talks 141 out of the 215 

I had a question for the union representative. 
Lottery employees are members of PERS; would that not be the 

MS. BRYANT: Yes, they are. 

SENATOR LEWIS: What percentage of the Lottery 
workforce have prior state service in other areas of state 

MS. BRYANT: We don't know. That would have been 
one of the things in our information request, was to get those 
kinds of statistics. So, we don't know. 

SENATOR LEWIS: You would not have that 
information just interfacing in your Union membership? 


SENATOR HUGHES: That's the question that I asked 
Mr. Pope joy before. 

Mr. Pope joy, would it be possible for you to get 
that information? I'm certain when you come up with a number 
like 40 out of 174, couldn't you computerize it in some way and 
come out with the information that we've asked for? 

How many of those people were previously state 
employees prior to coming on board, working for the Lottery? 

MR. POPE JOY: I'm sure we can give you that 
information, yes. 


SENATOR LEWIS: My follow-up question for the 
Union representative is, of the 215 that are being laid off, how 
many will not be benefitted at all by the two years of 
additional credit? 

MS. BRYANT: We don't know that because they have 
not yet identified for us who the individuals will be that's 
laid off. SO/ that would help us to determine who had prior 
state service, or who would benefit from the two years. 

SENATOR LEWIS: I thought I heard you guys saying 
earlier that the two years credit wasn't going to be much help 
for a variety of reasons. 

Now you're telling you don't know who it is, so 
really couldn't be making that determination in the first place. 

MS. BRYANT: I think what we know is the age of 
the Lottery, and the number of employees who have gone there, 
that we know some of the people have not been there for ten 
years to be able to vest. Some have been there less than eight 

But the total number, and as I said earlier, out 
of 215 positions, we don't how many individuals will be impacted 
by that. 

SENATOR LEWIS: But if somebody had been there 
for six years, and had been in some other state service for 
three years, maybe the two years would make some difference to 
them; correct? 

MS. BRYANT: Yes, it could make a difference. 

CHAIRMAN BURTON: I guess the chance would be, 
again, getting back to the two years, the two years means 


nothing if somebody's been on the job six years. It means 
something to somebody who's been a state employee before, and 
maybe even had 14 years' service. It gets them to 16, and 
they're 59 years old, or something. . 

If you picked out people by name, or you just 
know you have to get rid of X amount of stock clerks, for the 
want of a better reason, but one of the ways to minimize the 
personal hardship would be to take all the people. Because when 
it's all over, these are numbers to you and me, and it's people, 
the individual, it's their thing. They're out of a job. They've 
got family. They've got a problem. 

Some of them, it would be beneficial to, and 
others, it doesn't make a difference. 

Senator Knight, I believe you're next. 

SENATOR KNIGHT: Thank you, Mr. Chairman. 

You've been talking all around the questions. I 
think my question's been talked about. 

I was concerned about the 174 going down to 134, 
whether 134 was enough sales representatives to cover the state, 
considering that Florida now has 717. I don't know what they 
are, but certainly they have a larger number of personnel in the 
Florida Lottery than we have in California by a significant 
number from a labor standpoint. 

Should we have had more to begin with? 

MR. WAYNE: To answer your question, when you 
consider California population -- and I'm going by memory so 
don't hold me to the last person, Senator — is 31 million, 
probably going on 32 million. So, the other state populations. 


and in some cases like New York, which has one-third the 
geographical area, and maybe half or 62 percent of the 
population, we need that coverage. 

SENATOR KNIGHT: That's not the question. 

The question is, do we need — 

MR. WAYNE: The answer is yes. 

SENATOR KNIGHT: — a significant number more 
people to run the Lottery than the 853? 

MR. WAYNE: Do we need more than 853? No, I 
don't think so. 

SENATOR KNIGHT: Well, 853 a was satisfactory 

MR. WAYNE: I think that numbers change all the 
time, and you can tweak it, but I don't think you need a 
dramatic change of 215 people. That's like taking a hammer to 
an ant. 

SENATOR KNIGHT: I'm asking whether the number 
was right from a minimum standpoint? 

MR. WAYNE: I think it's approximately right at 
this point in time. Those people could be used. There's a lot 
of talent, a talent pool. And instead of having all these 
expensive contracts that the Lottery has of 50 million, and 30 
million, and 150 million, and 20 million, some of the talent 
could be used from our own employees. 

So, the answer is yes, in my opinion. Senator 

SENATOR KNIGHT: Mr. Pope joy, how long have you 
been acting Director? 


MR. POPE JOY: Since May 5th, 1997. 

SENATOR KNIGHT: This is the first cut in 
personnel since you've been there? 

MR. POPE JOY: Yes, sir. 

SENATOR KNIGHT: I assume that this is as a 
result of your evaluation of the Lottery management structure, 
personnel requirements? 

MR. POPE JOY: The answer to your question is yes, 
sir, but it's also been the result of analysis of a whole lot of 
other people that worked on the process. We've had virtually 
hundreds of people, including rank and file people. 

SENATOR KNIGHT: I'm assuming it was at your 

MR. POPE JOY: That's correct. 

SENATOR KNIGHT: The 215 layoffs, those are 
actual body layoffs — 

MR. POPE JOY: They are actual — 

SENATOR KNIGHT: — or are they positions? Are 
they body layoffs or are they positions that are being 

MR. POPE JOY: Bodies. 

SENATOR KNIGHT: Those are bodies. And they're 
only bodies that correspond to the positions. 

You don't have any more positions that you're 
wiping out? 


SENATOR KNIGHT: So it's 215 bodies, 215 


MR. POPE JOY: That's correct. 


CHAIRMAN BURTON: Senator Ayala. 

SENATOR AYALA: It seems to me that we should be 
concerned with the merits of this individual performing, not 
trying to micro-manage as to how many people are going to work 
and how many are not. 

If he's not doing job, let's don't confirm him. 
But if he's doing the job, let him out and let him do his job. 

So, quit micro-managing, and don't interfere with 
the number of employees that he keeps or lets go. That's his 

And if he doesn't do the job, then we can judge 
him in a further test we'll give him later on. 

CHAIRMAN BURTON: Does that hold for Corrections? 

SENATOR AYALA: I'm ready to move him out. 

CHAIRMAN BURTON: Call for the question. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Senator Burton. 
Four to zero. 


CHAIRMAN BURTON: Congratulations. 
Senator Kopp was here to speak in support of 
Mr. Pope joy and wants that on the record. 

[Thereupon this portion of the 
Senate Rules Committee hearing was 
terminated at approximately 2:51 P.M.] 
— ooOoo — 



I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California/ do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 
^D^ day of LA..^^^Uv^ , 1998. 

Shorthand Reporter 


Additional copies of this publication may be purchased for $3.50 per copy 
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Senate Publications 

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Please include Stock Number 352-R when ordering. 



^^lAY 27 1998 







ROOM 113 


MONDAY, APRIL 27, 1998 
10:35 A.M. 






ROOM 113 


MONDAY, APRIL 27, 1998 
10:35 A.M. 

Reported by 

Evelyn J. Mizak 
Shorthand Reporter 










GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 





Board of Governors 
California Community Colleges 

Teachers' Retirement Board 



Proceedings 1 

Governor's Appointees: 


Board of Governors 

California Community Colleges 1 

Background and Experience 1 

Questions by SENATOR HUGHES re: 

Need to Modify Vocational Programs 

to Meet Needs of Welfare Recipients 2 

Request to Report back on Meeting 

that Challenge 3 

Request to Look into 

Availability of Child Care 3 

Waiting Lists for Child Care 4 

Other Priority Needs of Individual 

Campuses in the System 4 

Plans to Assist Students in 

Transferring to Four-year Institutions 4 

Questions by SENATOR AYALA re: 

Preparing Students to Enter Four-year 
Institutions after Community College 5 

Questions by SENATOR KNIGHT re: 

How Board Interfaces with Local 

Community College Trustees 7 

Motion to Confirm 7 

Committee Action 8 


State Teachers ' Retirement Board 8 

Background and Experience 8 


statements by CHAIRMAN BURTON re: 

Low Benefits for Retired Teachers 9 

Questions by SENATOR HUGHES re: 

Current Statutory Composition of 

STRS Board 9 

Elected Officials as Voting Members 

of STRS Board 10 

Position on Legislation to Phase Out 

Investments in Tobacco Industry 11 

Questions by SENATOR KNIGHT re: 

Purpose of Study on Tobacco Investments 12 

Questions by SENATOR LEWIS re: 

Percentage of Portfolio in Stocks 14 

Motion to Confirm 15 

Committee Action 16 

Termination of Proceedings 16 

Certificate of Reporter 17 

— ooOoo-- 

CHAIRMAN BURTON: Governor's appointees, Richard 
F. Alden, sir. 

MR. ALDEN: Richard F. Alden, appearing before 
the Committee. 

As you all know, I'm Dick Alden, seeking 
confirmation of my appointment to the Board of Governors of the 
Community College system. 

By way of background, when I graduated from 
Anaheim High School, I was going to go to Fulleron Junior 
College because we didn't have the money to pay for tuition and 
board and room. Fortunately, USC came through with a football 
scholarship and I went to USC. 

CHAIRMAN BURTON: When was that? 

MR. ALDEN: In 1942, sir. 


MR. ALDEN: John and I were freshmen together. 
He was the left tackle and I was the center. 


MR. ALDEN: Yes, he was there. 

[Laughter. ] 

SENATOR KNIGHT: How many years did they play? 

CHAIRMAN BURTON: Mickey McArdle played about 
nine years, I think, as did Barney Poole from Army and 
Mississippi . 

MR. ALDEN: Correct. 

Anyway, after about three years in the Navy, I 
went back to SC on the GI Bill of Rights and went to law 
school. Went out, got a job, got married, had three children, 
one of whom is a professor at the University of Hawaii right 
now. Practiced law for number of years. 

I became affiliated with Hughes Aircraft, became 
Vice Chairman and General Counsel of Hughes. Retired from 
there, went into the real estate business in subdivision, which 
was an erroneous time to go in. 

I've since left that endeavor and felt that with 
this appointment, I possibly could add something to our 
marvelous community college system. 

I welcome any questions. 

CHAIRMAN BURTON: Senator Hughes. 


Under the new federal welfare reform legislation, 
the amount of time spent in vocational ed. training will be 
limited to only twelve months. 

Since most of your certificated programs are 
two-year programs, how does the community college propose to 
modify the their programs to meet the needs of welfare 
recipients? Have you thought about this? 

MR. ALDEN: I've heard of that, and I thought it 
was two years, but it's a one year now? 

SENATOR HUGHES: It's limited to twelve months; 
that's one year. So, when your programs are two-year programs, 
how do you propose to deal with that to meet the needs of the 
welfare recipients? 

MR. ALDEN: Well, my understanding is that each 
college is adjusting to that time frame and has the ability to 
start students halfway through or partially through a course in 
order to expedite the completion of any skill. 

And beyond that, Senator, I just don't know any 
specific remedies that are in process. 

SENATOR HUGHES: It's going to be a challenge to 
you, so I hope that you will be ready to report back to us how 
you're going to meet that challenge so that those welfare 
recipients can be accommodated. 

MR. ALDEN: I'll be happy to and be delighted to 
report back and give you specifics. 

SENATOR HUGHES: The other thing that I'm 
concerned about is availability of child care, which is often 
the absolute necessary help that recipients need to attend 

What's the current capacity of the community 
colleges to offer child care services for students? 

MR. ALDEN: Senator, I just don't know. 

SENATOR HUGHES: I would suggest that you look 
into that, too. 

MR. ALDEN: I will. 

SENATOR HUGHES: Sounds like I'm giving you a lot 
of homework, and I'm not meaning to, but I really do care about 
this because most of the welfare recipients in my area would be 
people who would be faced with these kinds of problems and who 
want to take advantage of the opportunity to attend community 

And you also need to find out if you have long 
waiting lists for child care. I'm surprised that you don't know 
that/ or you should be concerned about it. 

MR. ALDEN: I am concerned about it. Senator. I 
just don't know the specific — 

SENATOR HUGHES: You haven't gotten into that 

MR. ALDEN: That's correct. 

SENATOR HUGHES: I understand. 

Are there any other kinds of priority needs that 
you're aware of that the individual campuses have that you could 
express to us today? 

MR. ALDEN: Well/ our priority — my own personal 
priority would be to continue with our acceleration of our 
vocational or our educational training programs which is 
adjusting to the changing technology age. And I think it's 
essential to have the interfacing with the industry involved. 
I'm thinking of Santa Monica Community College/ where their 
professors go out to the industry involved/ the entertainment 
industry primarily. Find out what is necessary/ and then they 
adjust their curriculum accordingly. 

By the same token, the industry folks will come in 
and help teach the students what is really necessary in that 
area of business. 

SENATOR HUGHES: Do you know what plans the 
community colleges have in general to assist students who have a 
four-year institution as their objective and ultimate goal? 
What institutions do you know of within your system, and how do 

they go about assisting students to reach that goal? Or do they 
just leave them alone until they came say and say to you, "Now 
I've taken X number of classes; what do I do to get into an 

Or is that one of your institutional concerns? 

MR. ALDEN: It would be — it is an institutional 

And again, I'm going to have to take on 
additional homework, which I'm very happy to do, because I am in 
a learning process. I've been on the job now for seven months, 
I think, six or seven months, and I never understood, and still 
don't, the complexity of our community college system. 

But I am learning, and I'd be happy to do some 
mo r e home wo r k . 

SENATOR HUGHES: One hundred seven institutions, 
you've got a lot of homework to do. 

MR. ALDEN: That's correct. 

SENATOR HUGHES: Thank you very much. 

CHAIRMAN BURTON: Senator Ayala. 

SENATOR AYALA: Mr. Alden, some community 
colleges are better prepared to sends their students to a 
four-year college as others. Why is that, and what can we do to 
help the others prepare students that would like to go to a 
four-year institution from their community college upon 
graduation from community college? 

MR. ALDEN: We have discussed at some length — I 
don't know that this is an answer to your question — but we 
have discussed at some length a common course numbering system 

that would presumably help each college or require each college 
to offer the same type course for the same type of credit, and 
coordinate that with Cal. State and with the university system 
so that each college, if that course is taken, would receive the 
same credit. 

Right now, as I understand it, there are 
variances in credits that are received for same course or 
similar courses that are given. 

That might be one step that we could take to help 
the acceptance into four-year colleges. 

SENATOR AYALA: Community colleges are like a 
catch-all for students coming out of high school. Those that 
are unable to pay the tuition or come from homes that are not 
able to pay for college education, some that haven't cut the 
cord with the parents yet, they can't get away to a four-year 

We have all kinds of programs for terminal 
students at that point if they prefer not to go on to a 
four-year college, but I think we should be prepared to get 
these students that would like to go to a four-year college 
after graduating from community college. I think we should make 
every effort to make sure that they're all taken care of. 

I remember that Senator Rodda told me one day 
that the community college is the pivotal position of any 
increment of college work. There you can go for a college prep, 
or you can get a vocation, but it's something that we need for 
those students that want to go into a four-year college. 

I'd like to see better effort in that" direction 

from the community colleges. 

MR. ALDEN: All right, I'll take that back as a 

CHAIRMAN BURTON: Senator Knight. 

SENATOR KNIGHT: Mr. Alden, can you give me an 
idea of how the California Community Board of Directors 
interfaces with the local community college board of directors? 
How do your policies interact with the local boards? What 
happens if there is a difference of policies? Can you give me 
some idea of that interaction? 

MR. ALDEN: Since I've been appointed, we have 
had three meetings — with all these acronyms, even being at 
Hughes I get confused — but we have had joint meetings with the 
boards, the executive directors of the boards of trustees of the 
community colleges, and we plan one on May 14th in San Diego. 

And I sense that there's a developing real sense 
of cooperation and mutual exchange of information within the 
system. And I have to think that that is going to promote a 
better system and better performance at the college level. 


CHAIRMAN BURTON: Moved by Senator Ayala. 

SENATOR AYALA: Yes, fight on. I'll move it. 

SECRETARY WEBB: Senator Ayala. 



Ayala Aye. 

Senator Hughes. Senator Knight. 


Knight Aye. Senator Lewis. 




SECRETARY WEBB: Lewis Aye. Senator Burton. 


SECRETARY WEBB: Burton Aye. Four to zero. 

CHAIRMAN BURTON: Mr. Alden, what I would suggest 
is, before this is taken up on the Floor, is that either if you 
can remember them, or maybe get together with Senator Hughes to 
try to get some of the information to those questions. Because 
after seven months on the Board, you shouldn't have all the 
answers, but I think a little bit better feeling. 

MR. ALDEN: All right, sir. It will be done. 
Thank you. 

CHAIRMAN BURTON: Thank you very much. 
[Thereupon the Rules Committee 
acted upon legislative items.] 


MR. FENIMORE: Good morning, ladies and 
gentlemen. I'm George W. Fenimore, appointee for continuing as 
a public member of the California State Teachers' Retirement 
Board. I've been on about four-and-a-half years at this point. 

My background includes educationally 
undergraduate Northwestern University, Harvard Law School, the 
Executive Program at UCLA. 

Business-wise, I've been associated with Ford 
Motor Company, Hughes Aircraft Company, TRW where I was head of 
their international operations, and Litton Industries, among 

I was married. My wife is now deceased. I have 


three children, one of whom is an attorney; one of whom is in 
social welfare counseling; another was a Major, a fighter pilot 
in the United States Air Force. 

SENATOR KNIGHT: What's that? 

CHAIRMAN BURTON: That got him. 

MR. FENIMORE: He flew F15s, sir. 

SENATOR KNIGHT: Good airplane. 

CHAIRMT^ BURTON: This is just my own personal 
opinion. It's got nothing to do with your confirmation. 

I just think the retirement benefits for teachers 
is just absolutely outrageous, especially those like — 


CHAIRMAN BURTON: God, yes. The teachers that 
taught me, what is it, two percent they get? I mean, they 
retired, and I mean, I don't know how they can live on it. 

And I know we're the ones that have to set that, 
not you, but it just seems to me that the teachers in their 
retirement are woefully inadequate. 

As people start looking to different jobs, and 
they start looking at where they might be when they retire, it 
would be enough to discourage people from being a teacher. 

Any questions from Members of the Committee? 
Senator Hughes. 

SENATOR HUGHES: How do you feel about the 
current statutory composition of the STRS Board. 

MR. FENIMORE: The current staff of the Board? 

SENATOR HUGHES: The composition of the Board. 

MR. FENIMORE: It now includes a number of 


teachers representing various teacher groups, organizations, a 
banker, an insurance person, a public member, and the 
constitutional officers. 

I think there's a very good balance there. My 
role, I think, as a public member is to represent not only the 
teachers but the public at large, and to that extent I try to do 


Elected officials represent the public at large. 
Do you think some elected officials should be on that STRS 
Board? If not, why not? 

MR. FENIMORE: You mean such as the Controller, 
the Treasurer? 

SENATOR HUGHES: They're elected officials. 

MR. FENIMORE: Yes, they are. 

SENATOR HUGHES: I said elected officials. I 
didn't say specifically what category. 

CHAIRMAN BURTON: There are some on there as of 
this year. 

SENATOR HUGHES: No, I mean as voting members. I 
mean as voting members. 

MR. FENIMORE: Yes, I think they should vote. 
Was that your question? 

SENATOR HUGHES: No. Do you think that the ones 
who are on there ex-officio should be voting members? Is that 
what you're saying? 

I asked if elected officials should be on it. I 
didn't mean — 



MR. FENIMORE: I agree that they should be, to 
answer your question. 


MR. FENIMORE: Because I think they represent the 
state as a whole, especially the Controller, especially the 
Treasurer. They're responsible for the fiscal well being of the 
state as well as for the Teachers' Retirement Fund, and they 
should have an interest in that. 

SENATOR HUGHES: How about a rank and file person 
like Senator Burton or Senator Knight? They're just elected 

CHAIRMAN BURTON: I'd rather Senator Hughes. 

MR. FENIMORE: We would welcome his 

SENATOR HUGHES: You wouldn't knock it if someone 
else proposed it? 

MR. FENIMORE: That is correct, yes. 

SENATOR HUGHES: That's the most noncommittal 
statement I've ever made. 

What's your position on legislation? There are 
two pieces of legislation, one on the Assembly side and one on 
the Senate side. One by Senator Hayden, one by Assemblyman Knox 
to phase out the investments by STRS and PERS in the tobacco 

How do you feel about that? 

MR. FENIMORE: Thank you. This has been a 
subject of considerable controversy and discussion. 

Personally, I'm not a smoker. We do have 



investments in tobacco stocks, and we have designated a study to 
be made and come back with a recommendation. 

We've had -- Assemblyman Knox appeared before our 
Board twice on this subject, and the issue is still under 
discussion and will be dealt with as soon as we get our study. 

SENATOR HUGHES: When is your study due? 

MR. FENIMORE: I believe in a month or so. 

SENATOR HUGHES: So, it's imminent? 

MR. FENIMORE: Yes, it is. 


MR. FENIMORE: Thank you. 

SENATOR KNIGHT: Mr. Chairman. 

CHAIRMAN BURTON: Senator Knight. 

SENATOR KNIGHT: What is your study going to 
actually do? What are you trying to find out? 

MR. FENIMORE: To determine whether or not, as I 
see it — 

CHAIRMAN BURTON: How much money they would lose 
if they divest. 

SENATOR KNIGHT: Based on what? 

MR. FENIMORE: That's right. Whether we should 
divest of our tobacco stocks. 

SENATOR KNIGHT: Yes, but based on what? 

MR. FENIMORE: Based on the cost and the future 
of the tobacco industry. 

I think Assemblyman Knox, as he appeared before 
us, is concerned not with respect to the moral aspects of 
tobacco, but the future with respect to the tobacco industry. 



SENATOR KNIGHT: You're suggesting that the 
government is trying to put the tobacco industry out of 
business, regardless of what other businesses, industries, or 
whatever they happen to be — 

CHAIRMAN BURTON: Not as long as you're around, 
they'll never go out of business. 

MR. FENIMORE: I didn't say that, sir. 

I said we're waiting for a determination, a 
recommendation, with respect to whether or not the State 
Teachers' Retirement Board should continue to hold its tobacco 

We have, it seems to me, a dual responsibility, 
but primarily to protect the investments of the teachers. That's 
what we're here for. 

SENATOR KNIGHT: I understand, but you're also, I 
gather, basing that decision on what the government is trying to 
do to the tobacco industry, which is a legal industry. 

MR. FENIMORE: That's correct. 

Does that answer your question? 

SENATOR KNIGHT: I don't know that it does, but I 
guess I'll wait and see -- 

MR. FENIMORE: Well, as far as our consideration, 
school is still out with respect to what our study will show and 
what our position will be. 

SENATOR KNIGHT: I'm just concerned about the 
ground rules and the assumptions you make in laying out the 
mechanism by which you conduct that study. 

MR. FENIMORE: Our primary interest is to protect 



those funds, because we have pressures from different directions 
about certain types of stock all along the road, not just 

One of the concerns that we have is that we don't 
want to set a precedent just because we have pressure to dispose 
of it. 

SENATOR KNIGHT: You're getting pressure, and 
that's why you're doing it. 

But, for example, Phillip Morris has numerous 
other businesses that are nontobacco. 

MR. FENIMORE: That's correct. 


You know, this whole thing is a hyped thing that 
just irritates me to no end. 

CHAIRMAN BURTON: Senator Lewis. 

SENATOR LEWIS: What percentage of the portfolio 
right now is invested in stocks? 

MR. FENIMORE: In stocks, about 62 percent of the 
total investment, which is about 85 billion. 

SENATOR LEWIS: And in the last five or ten 
years, what was the high water mark in terms of percentage of 
the portfolio invested in stocks? 

MR. FENIMORE: I don't know the answer to that, 

SENATOR LEWIS: Is the trend right now trending 
up, or is it trending down? 

MR. FENIMORE: To invest in stocks? 

SENATOR LEWIS: Right, in terms of the percentage 



for your entire portfolio. 

MR. FENIMORE: The trend has been up, is up, to 
invest more in stocks than in fixed income. 

SENATOR LEWIS: There doesn't seem to be much 
concern at this point in time of the market being at dizzying 

MR. FENIMORE: We are always concerned about that 
sir; yeS/ sir. 

One response to that is, are we investing for the 
long run or short run? And statistically, it appear that stocks 
have out performed bonds over the years, and we're in for the 
long run. 

SENATOR LEWIS: I understand that. That's 
certainly, over the long run, is the correct way to go. 

What happens if there's a 25 percent correction 
on the market from where you are right now? 

MR. FENIMORE: We would suffer from that. 

SENATOR KNIGHT: It started out early this 

CHAIRMAN BURTON: What I want to do is commend 
the STRS for over the year adhering to the McBride principles, 
which you did on your own in the North of Ireland, and I want to 
commend you for Jennifer, who does such a great job in getting 
me to carry your legislation that I have no idea what it does, 
but she explains it. 

Moved by Senator Ayala. Call the roll. 

SECRETARY WEBB: Senator Ayala. 




SECRETARY WEBB: Senator Hughes. 

SECRETARY WEBB: Hughes Aye. Senator Knight. 

SECRETARY WEBB: Knight Aye. Senator Lewis. 

SECRETARY WEBB: Lewis Aye. Senator Burton. 

SECRETARY WEBB: Burton Aye. Five to zero. 
MR. FENIMORE: Thank you, ladies and gentlemen, 
CHAIRMAN BURTON: We think very highly of 
Jennifer, enough so that we want to keep her. 

[Thereupon this portion of the 
Senate Rules Committee hearing was 
terminated at approximately 11:05 A.M.] 
— ooOoo — 



I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 
rp/^*^ day of C^f'-^m-^ / 1998. 

Shorthand Reporter 


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ROOM 113 


MONDAY, MAY 4, 1998 
1:41 P.M. 


Reported by 




ROOM 113 


MONDAY, MAY 4, 1998 
1:41 P.M. 

Evelyn J. Mizak 
Shorthand Reporter 










GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NANCY MICHEL, Consultant on Governor's Appointments 





JOAN E. DENTON, Ph.D., Director 

Office of Environmental Health Hazard Assessment 

KRISTEN HAYNIE, Staff Consultant 

California Association of Professional Scientists 


University of California at San Francisco 

Scientific Review Panel 

JODI M. WATERS, President 
California Oxybusters 

LLOYD J. WOOD, Inspector General 
Youth and Adult Correctional Agency 

Youthful Offender Parole Board 

MIKE JIMENEZ, Executive Vice President 

California Correctional Peace Officers Association 


Doris Tate Crime Victims Bureau 



Minorities in Law Enforcement (MILE) 

Torres & Torres 



Proceedings 1 

Governor's Appointees: 

JOAN E. DENTON, Ph.D., Director 

Office of Environmental Health Hazard Assessment 1 

Background and Experience 1 

Questions by SENATOR AYALA re: 

Position on MTBE 2 

Saf eness of MTBE in Drinking Water 3 

Questions by SENATOR LEWIS re: 

Carcinogenicity of MTBE 5 

Trade-off of Cleaner Air for 

Polluted Groundwater 5 

Time Table on Evaluating Effects of 

MTBE in Drinking Water 5 

Number of ppb Necessary for MTBE to 

Affect Taste of Water 6 

Questions by CHAIRMAN BURTON re: 

Increased Exposure to Pesticide in 

Lompoc 6 

Problem of DBCP in Water Supplies 7 

Witnesses in Support: 

KRISTEN HAYNIE, Labor Relations Consultant 

California Association of Professional Scientists 9 


University of California at San Francisco 

Scientific Review Panel 9 

Questions by SENATOR LEWIS re: 

Risk Assessment of OEHHA on Effects of 

Power Lines or EMF 10 

Motion to Confirm 10 

witness in Opposition: 

JODI M. WATERS, President 

California Oxybusters 10 

Questions by SENATOR LEWIS re: 

Familiarity with Problems of 

Glenville Residents 12 

Resumption of Testimony by MS. WATERS 13 

Questions by SENATOR AYALA re: 

MS . WATERS ' Organization 14 

Questions by SENATOR KNIGHT re: 

Current Status of MTBE 15 

Reason for Banning Boats with 

Two-Stroke Engines 15 

Committee Action 16 

LLOYD J. WOOD, Inspector General 

Youth and Adult Correctional Agency 17 

Background and Experience 17 

Questions by CHAIRMAN BURTON re: 

Identification of Correspondence or 
Communication that Leads to Investigation 18 

Ability to Pick and Choose Investigations 19 

Standard for Investigating 19 

Witnesses in Support: 


Youthful Offender Parole Board 20 

Questions by SENATOR KNIGHT re: 

Reporting Authority 22 

Statements by SENATOR AYALA re: 

Bill that Would Allow Inspector 

General to Report Directly to Governor 22 

Support for Work of MR. WOOD 23 


Further Witnesses in Support; 

MIKE JIMENEZ, Executive Vice President 

California Correctional Peace Officers Association ... 23 


Doris Tate Crime Victims Bureau 24 


Minorities in Law Enforcement (MILE) 25 

Witness in Opposition: 


Torres and Torres 25 

Questions by SENATOR KNIGHT re: 

Expected Qualifications 

for Position of I.G 30 

Questions by SENATOR AYALA re: 

Tenure in Office of I.G 31 

Questions by SENATOR AYALA of MR. TORRES: 

Review of Investigative Reports 

Prepared by I.G 31 

Lack of Awareness of Work 31 

Background of Nominee 32 

Statements by CHAIRMAN BURTON re: 

Faulting Individual for Not Meeting 
Unestablished Criteria for Job 33 

Specific Instances where Nominee 

Failed 35 

Resumption of Testimony by MR. TORRES 35 

Statements by CHAIRMAN BURTON re: 

Dismissal of Executive Officer 38 

No Proof that Dismissal Was Due 

to Racism 40 

Resumption of Testimony by MR. TORRES 40 


statements by CHAIRMAN BURTON re: 

Irrelevancy of Firing 41 

Statements by SENATOR AYALA re: 

Familiarity with Circumstances Leading 

to Firing of YOPB's Executive Officer .... 43 

Unprofessionalism Shown by Governor's 
Office Personnel 44 

Resumption of Testimony by MR. TORRES 45 

Statements by SENATOR AYALA re: 

Background Check into Nominee 46 

No Evidence of Discrimination 46 

Resumption of Testimony by MR. TORRES 47 

Questions by CHAIRMAN BURTON re: 

Investigation into Corcoran Situation 48 

Inability of I.G. to Investigate without 
Approval of Agency Secretary 48 

Discussion on Purview of Committee 50 

Questions by SENATOR HUGHES re: 

Clear Description of Rules and Regulations 
that I.G. Must Follow to Initiate an 
Investigation 51 

Statements by SENATOR AYALA re: 

Investigation by I.G. into Stockton 

Youth Authority Incident 52 

Questions by SENATOR KNIGHT re: 

Investigative Experience 52 

Access in Current Position to Persons 

with Prosecutorial Backgrounds 53 

Statements by SENATOR KNIGHT re: 

Presumptuousness on Allegations against 

Nominee without Proof 54 

Requirement for I.G 55 


statements and Questions by CHAIRMAN BURTON re: 

Responsibilities of I.G 55 

Required Approval by Agency Secretary 56 

Need for Change in Direction 57 

Discussion of Authority of Position 57 

Motion to Confirm 59 

Committee Action 60 

Certificate of Reporter 61 

• --ooOoo — 

CHAIRMAN BURTON: Next is Joan Denton, Director 
of the Office of Environmental Health Hazard Assessment. 

DR. DENTON: Good afternoon, Mr. Chairman, 
Members of the Committee. 

My name is Dr. Joan Denton, and I'm here for your 
consideration to the appointment of Director of the Office of 
Environmental Health Hazard Assessment. 

This office is the smallest department within the 
California Environmental Protection Agency, but it's unique in 
that almost half of the approximately 125 employees have either 
one advanced degree or several advanced degrees in the area of 
toxicology or a related field of public health. 

Our mission is simply good science. We protect 
and enhance public health and the environment by being the lead 
state agency charged with objectively evaluating or providing 
guidance on how to evaluate risks from chemicals in the 
environment. No other department in the state and, I would 
venture to say, in the country has a focused mission in this 
arena, coupled with the intellectual brain power to do it. 

Since my appointment, we have promulgated, we 
have adopted 27 public health goals, and these have been 
forwarded to the Department of Health Services, who is using 
them to evaluate their maximum contaminent levels of these 
chemicals in water. 

Also, last month our scientific review panel 
approved our health risk assessment for diesel exhaust. That 

was after about eight years in the making. 

This coming year, we're working on additional 
public health goals, including one for methyl tertiary butyl 
ether or MTBE. We will be continuing to implement Proposition 
65, including developing a hazard identification document on 
MTBE. We will be finaling guidance documents for use by risk 
managers in performing risk assessment. And finally, we will be 
conducting a public workshop this summer, which will be devoted 
to emerging challenges that the California Environmental 
Protection Agency will be facing in the next five to ten years. 

On the one hand, I am very proud, and yet on the 
other hand, I'm very humbled and yet honored to be considered 
fpr this position. 7\nd I will be happy to answer any questions 
that you may have about either me or about my office. 

Thank you. 

CHAIRMAN BURTON: How's the nun? 

DR. DENTON: Well, well. 

CHAIRMAN BURTON: She sent me a note and said she 
would no longer pray for my soul if we didn't confirm you. 

[Laughter. ] 

DR. DENTON: Senator, I read the same note, and I 
didn't see that statement. 

CHAIRMAN BURTON: She talks in tongues when she 
speaks. Senator Ayala. 

SENATOR AYALA: Ms. Denton, what is your position 
on MTBE? Do you think it's safe in our environment? 

I understand you spoke some place referring to 
MTBE, and I don't know what your position was. 

DR. DENTON: Senator, last year I actually spoke 
before three legislative subcommittees on methyl tertiary butyl 
ether. At that time, I was a staff scientist for Air Resources 

I spoke about the air quality benefits of cleaner 
burning gasoline, and I also addressed some of the issues 
regarding MTBE and health effects, which we had been following 
for months and months, and which was based on information from 
the United States Environmental Protection Agency, the National 
Academy of Sciences, the White House, the Health Effects 
Institute, and so forth. 

So, I was basically a staff scientist reporting 
to the policy makers on information which was available then 
about the health effects of cleaner burning gasoline, and what 
was known about the inhalation, the air quality effects of MTBE. 

SENATOR AYALA: What do you think of it now? Is 
it safe? 

DR. DENTON: I think essentially now what I 
testified to last year, and that is that, as you know, there's a 
risk assessment being done right now for California, California 
specific. And the issue regarding MTBE is not one of air but 
rather of water. 

And the information that was available, and I'm 
not aware of any information that's come out that's changed 
that, essentially said that complaints which had been attributed 
to MTBE, such as dizziness, eye irritation and so forth, there 
was no real strong scientific evidence that that was occurring 
because of exposure to MTBE. But the real issue was the 


solubility of MTBE in the water, and that's something that the 
state is continuing to assess. 

SENATOR AYALA: As far as now, is it safe or is 
it a health risk in water? 

DR. DENTON: As far as we know, it's not a health 
risk when you are exposed to it in the air. The concentrations 
are way below what you would expect to see acute effects of 

SENATOR AYALA: How about in the water itself, 
the potable water? 

DR. DENTON: In the water, the real issue seems 
to be that you can taste and smell MTBE in the water before it 
would be a potential health threat, but we're in the process of 
setting some numbers by which we would be able to evaluate 
concentrations of MTBE should they occur in the water and what 
potential health threat they should be. 

But the bottom line is that it's likely more a 
taste and odor, a secondary effect, before you would see a real 
acute or chronic health effect. 

SENATOR AYKLA: A lot of folks are over reacting 
to MTBE? 

DR. DENTON: I think in some cases yes, but I 
also think that it's important to be aware of the chemical in 
the environment. And to do the necessary scientific studies to 
evaluate what, if any, there's a risk. 

SENATOR AYALA: Thank you. 


In your professional opinion, do you believe that 

MTBE is or is not a carcinogen? 

DR. DENTON: I believe in my professional 
opinion that MTBE is a weak carcinogen. There are chemicals 
that are stronger, but there is evidence that it does, in 
laboratory animals, that it is a weak carcinogen. 

SENATOR LEWIS: Do you believe that the trade-off 
in terms of cleaning the air versus whatever groundwater 
pollution is taking place has been a net benefit in terms of 
lowering cancer risk? 

DR. DENTON: I think at this point that's true, 
that the benzene reduction, and benzene is a known human 
carcinogen, that was reduced by 50 percent, and that the benefit 
to reducing those potential cancer cases which, from the air, 
there is a benefit to using the gasoline. 

But again, we're still in the process of 
evaluating that. 

SENATOR LEWIS: What's the time table on that 

DR. DENTON: Well, there are a couple of things 
that are going on. As I mentioned, we are going to be setting a 
public health goal for MTBE. We're also developing a health — 
a hazard identification document under Prop. 65. 

The public health goal will be — it's actually 
out for public comment right now and will be completed by this 
summer. The hazard identification document will be completed 
some time this year, and at the same time, a separate activity 
is going on. A risk assessment is being developed by the 
University of California. And that is due to be at the 

Governor's -- on the Governor's desk by January first of next 

SO/ all of this information will be coming in. 

SENATOR LEWIS: How many parts per million would 
it normally take for the average human before they taste it in 
drinking water? 

DR. DENTON: Senator, I believe that this is 
something that the Department of Health Services right now is 
developing a secondary health standard for MTBE based upon odor 
and taste. 

And I believe for those people who are 
particularly sensitive to MTBE, I believe their number is 5 ppb. 
So, people who are sensitive may taste as low as 5 ppb. 

CHAIRMAN BURTON: Are you familiar with the 
problem down in Lompoc, where, I guess, there's been increased 
exposure to pesticide, where there have been certain 
illnesses — cancers, respiratory diseases. Do you know about 
that little pocket of problem? 

DR. DENTON: Yes, I do, Mr. Chair. 

CHAIRMAN BURTON: Do you want to comment on it, 
what either your office could do or could be done? 

DR. DENTON: We have been involved with Lompoc 
for several years. We developed a report on the health of the 
residents down in the Lompoc area. 

The draft final report was issued last 
December. We had a public comment period, several public 
workshops, and that document is now being revised to be released 
within a couple of weeks with sort of the final conclusions 

about the Lompoc area. 

In addition, we are working with a work group 
down there which is working on the next steps to try to isolate 
what might be the causes of increased illnesses in that area. 

CHAIRMAN BURTON: Are you familiar with what's 
going on in the other parts of the valley? DBCP is a pesticide 
that seems to have seeped into the water supplies up and down 
the valley. 

DR. DENTON: Yes, I am, Mr. Chairman. 

CHAIRMAN BURTON: I hear that could really ~ 
disaster may be too big a term — be a real problem. 

DR. DENTON: We're in the process of again 
developing a numerical quantitative number which can be used as 
a public health — which will be a public health goal for the 
Department of Health Services to re-evaluate their maximum 
contaminent level, and we are doing that now. So, sometime this 
year, we will be getting a document out on the numerical value 
of what would be the — what's called the diminimus risk level; 
what level would there be ten to the minus six risk of DBCP in 

CHAIRMAN BURTON: Are you talking about like to 
be used in the future? Won't the proof of the pudding be in the 
eating, when a lot of kids take ill because of this stuff in the 

DR. DENTON: Mr. Chair, I don't know that 
children are particularly a sensitive group. I know that it's 
mostly a reproductive toxicant. 

CHAIRMAN BURTON: We won't be talking about 


children then, I guess. 

DR. DENTON: Well, I also know that it has some 
carcinogenic effects. 

I guess the bottom line is that that development 
of that information, the setting of a number, is going on right 

CHAIFIMAN BURTON: But isn't it too late? The 
stuff's in the water. In other words, it seeped in, I guess, 
through the groundwater supply, in theory anyway, as a result of 
the usage. 

So, you would do a study as to what the danger 
level would be in the water. And then, if the water's got too 
much of it, you close down the wells? 

You're kind of the cart. The horse is out of the 
barn, so you're really not trying to prevent something. You're 
trying to figure out how to deal with the cards that were dealt 
you after game started. 

DR. DENTON: Right, Mr. Chairman, and I need to 
again, first of all, we're a risk assessment group. We aren't 
risk management. Also, we are not the lead agency on 
pesticides. That's the Department of Pesticide Regulation. 

But DBCP is on our list of PHGs to develop a 
public health goal for, which will be provided to the Department 
of Health Services. Risk management is in their arena or in 
DPR's arena. 

CHAIRMAN BURTON: The Department of Pesticide 
Regulation, where is that? In Health or Ag? 

DR. DENTON: No, that's within Cal EPA. Cal EPA 

has six agencies. 

CHAIRMAN BURTON: Any other questions? Pleasure 
of the Committee? 


Just identify yourself. 

MS. HAYNIE: Hi, my name is Kristen Haynie. I 
represent the California Association of Professional Scientists. 
I'm a labor relations consultant. We represent about 2300 state 
scientists, many of which are employed at Dr. Denton's 

We are here to support her appointment, and 
primarily for the scientists at OEHHA, it's been remarkable the 
changes that Dr. Denton has already accomplished in six months. 

She was gracious enough to meet with us five 
months ago and ask our opinion about what needed to be done, and 
has implemented many of those suggested changes. 

The primary positive thing I've heard from the 
scientists since we've heard of the confirmation hearing being 
rescheduled, or scheduled so soon, was that OEHHA has returned 
to public health as their mission. 

Thank you. 


MR. GLANTZ: Hi, Stan Giant z. I'm a member of 
the scientific review panel, which was mentioned earlier. In 
fact, I was appointed by this Committee. 

I would also like to testify in support of Joa" . 
I've known her longer than either of us care to admit. And I 
think after many years of political hacks being in charge of 


OEHHA, we now have a scientist. I think that it's a real step 

I think the actions that this Committee took in 
refusing to confirm Rick Becker led to a real turn-around at the 
Agency, and it's now dealing with science again. 

And I think the diesel report, which she 
mentioned, which was just approved, re-established California's 
leadership in environmental issues. 



Doctor, I was just curious. In terms of your job 
regarding risk assessment, does anything dealing with power 
lines, or EMF, or anything like that, come under your 

DR. DENTON: As far as I know. Senator, we 
haven't. I could get back to you on that. It could have been 
before my tenure, but I'm not aware of that. 


CHAIRMAN BURTON: Moved by Senator Lewis. Call 
the roll. 

Excuse me, is there opposition? 

MS. WATERS: My name Jodi Waters. I'm the 
President of the California Oxybusters. We represent over 
60,000 Californians, and our issue is MTBE. 

Last year, Joan Denton testified before a number 
of subcommittees, as she had said, and I will quote: "MTBE is 
one of the most tested chemicals and is safe." 

You have the notes there from Dr. Melman, who has 


refuted her testimony all the way through. 

This chemical was not tested the way they claimed 
it was. They knew it was unsafe. One of her remarks during the 
hearings was, "Hindsight is 20-20. We never thought to look at 
the water." 

Excuse me. If she is going to be head of our 
environment, she better look at the whole picture and not leave 
out the water. When it comes to have people been harmed, can 
you taste MTBE in the water, does it harm you when you are 
drinking it, I will tell you right now, yes. 

When you're breathing it in the air, I have a 
statement here from a tanker driver who was exposed to MTBE from 
a few seconds to a few minutes on daily basis, where he's 
extremely ill. He is now permanently disabled, and the 
statements from his doctors have stopped him from working 

The people in Glenville have MTBE in their water 
at high levels. The people in Santa Monica have MTBE in their 
water. There isn't a waterway in the State of California that 
isn't currently contaminated with MTBE. 

We asked for a ban on this chemical, but instead, 
we were fought with testimony saying that oh, it's perfectly 
safe, and there's over 70 health studies, none of which have 
ever been peer reviewed. 

And Joan Denton was aware of this. She got up 
and she testified. A little while ago she talked about the 
White House reports that she had taken into consideration that 
she skewed. 


If she is going to be in charge of the 
environment, of protecting us, she should be held accountable 
for what she's done with the testimony in regards to banning 

The people in Glenville, California, their 
properties are worthless. They're extremely ill. Out of 135 
residents of the town of Glenville, 65 of them have MTBE in 
their water. Out of that 65 people, you have 10 people that 
have a lupus-type disease. All of them have skin rashes. 
Forty- five of them who never had asthma before now have asthma 
from breathing this. Fifteen people have the same kind of 
cancer. You have three people who have had brain infections and 
are having grand mal seizures. This is from drinking MTBE in 
the water. 

We have doctors' reports, and we have now health 
studies from Dr. Broughtbar in Los Angeles. He has seen over 
400 people. 

SENATOR HUGHES: I'd like to ask you, I just want 
to know the location of Glenville. 

MS. WATERS: It's 35 miles east of Bakersfield, 
up in the Sierras, in the foothills. 

CHAIRMAN BURTON: Senator Lewis. 

SENATOR LEWIS: I wanted to ask Dr. Denton, are 
you familiar with Glenville? Have you looked into that? 

DR. DENTON: Yes. Actually, again, this was when 
I was working for the Air Resources Board. And the monitoring 
of MTBE in the Glenville water supply was done by another 
agency. So, as that information became available, there are 


some -- I think there's one or two private wells there that are 
highly contaminated with MTBE, and people have had to stop using 
the water. 

MS. WATERS: It's not one or two wells. I. was 
talking to the people in Glenville today. 

The Agency, John Newmans came out and they 
retested. They're finding even higher levels in more and more 
wells each time they go in there to test. 

One of the statements that Ms. Denton made was 
that we reduced benzene by 50 percent. I'd like clarify that. 
Benzene was in our gas at 1.5 percent; it's now in our gas at 
one percent. By my calculations, that's a third, not a half. 

One of the things that wasn't looked at, that 
should have been looked at, at the time that MTBE was put into 
the gas, was the synergistic effect. So, you have a known 
carcinogen such as benzene that's being synergized by MTBE. 

The animal studies that have been done on MTBE 
show that it's much more dangerous a chemical than anyone had 
ever thought it to be. The human tests that are now coming out, 
this chemical works on your body the same way HIV does. It 
breaks down your immune system. It also breaks down your 
central nervous system where you have loss of memory and motor 
movement, things like that. 

This chemical shouldn't have been allowed, but 
yet she came forth at every single subcommittee, and she 
testified as to how safe it was: we have all the tests; all the 
work has been done. 

It wasn't done, and she clearly knew that none of 


the tests that she was testifying about had been peer reviewed. 
Nor was the Bushy Run Study brought into the matter, which is a 
test that was done by the oil industry that showed, clearly 
showed, the bad health effects of MTBE. That was never brought 

I urge this Committee not to confirm. We need to 
have somebody in charge of our environment who cares about the 
environment, who isn't out for special interest groups, but for 
all of the people. 

I have four children. What legacy am I giving 
them by MTBE being in the water, when it's in every waterway? 

Now we're going to ban boats because we have MTBE 
in the gas. 

The air reduction did not quantify us using this 
chemical at all. 

Thank you. 

SENATOR AYALA: May I inquire, the organization 
you represent is what? 

MS. WATERS: California Oxybusters. We're a 
grassroots organization. We collected over 122,000 signatures 
from the people of State of California who did not want this 
chemical used. We wanted it to be put on hold until the studies 
were done. That's basically all we asked. Don't ban it 
forever, but ban it until the studies were done. 

And over and over again, we had our public 
agencies coming out, testifying as to how great and how safe it 
is. Now we've got it in the waterway, in every waterway in the 
State of California. Your children, your grandchildren, your 


relatives are drinking that water. 

CHAIRMAN BURTON: Not for you, but just generally 
I think what happened is, a lot of agencies that looked at MTBE 
were looking at it as it applied to the air. And the agency 
that was supposed to be looking at it as it applied to the water 
never looked at it, which was not the Air Resources Board. 

I'll move approval. Call the roll. 

Oh, you had a question? 

SENATOR KNIGHT: I was just going to ask what the 
status of MTBE is right now? 

CHAIRMAN BURTON: The Mount joy bill had a study 
of MTBE and other additives. 

SENATOR KNIGHT: But at the present time, we're 
still using it in gasoline? 

MS. WATERS: Yes, yes. 

DR. DENTON: Yes, Senator. 

SENATOR KNIGHT: Is that true? Is that why we're 
banning boats on lakes, because of the gasoline and the MTBE in 
the gasoline getting into the water? 


DR. DENTON: Senator, these two-stroke engines 
that are used in boats are pretty inefficient, and a lot of 
gasoline, I think it's 30 percent of the gasoline, can be 
spilled, just unburned into the water. So, some of the Regional 
Water Boards are looking very closely at removing and banning 
recreational water boats. 

CHAIRMAN BURTON: The two-stroke. 

DR. DENTON: Two-stroke engines; that's correct. 


CHAIRMAN BURTON: Not the fancy boats like we 

MS. WATERS: We have new two-stroke engines that 
are coming out that are -- the technology is getting better; the 
companies are working on it. 

In the meantime, they are banning boats, not just 
the water agencies. There's a bill right now before the 
Assembly to ban all two-cycle engines on all waterways in the 
State of California. And the reason behind it is MTBE . 

The Water Districts realized the problem with 
MTBE, that they cannot be delivering water to consumers that has 
high amounts of MTBE in it. 

The taste threshhold is between two and ten parts 
per billion on MTBE. 

CHAIRMAN BURTON: Call the roll. 
• SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. Senator Knight. 

Senator Lewis 


SECRETARY WEBB: Lewis Aye. Senator Burton. 





SECRETARY WEBB: Hughes Aye, Knight Aye. Five to 



CHAIRMAN BURTON: Tell the nun. 
DR. DENTON: I will. Thank you. 
CHAIRMAN BURTON: How's she doing? 
DR. DENTON: Very well, Mr. Chairman. 
CHAIRMAN BURTON: You do have a family 


[Thereupon the Committee acted 
upon legislative agenda items.] 

CHAIRMAN BURTON: Lloyd Wood, Inspector General, 
Youth and Adult Correctional Agency. 

MR. WOOD: Good afternoon. Senator Burton and 
Members . 

I'd like to take this opportunity to thank you 
for allowing me to appear before you again. A few years ago I 
appeared before the Committee and was fortunate enough to be 
confirmed for a position on the Youthful Offender Parole Board. 
This time I'm before you as a nominee for the Inspector General, 
for YACA. 

You have the resume on my background. The only 
item I would highlight on is, I began in law enforcement at the 
lowest possible rank and worked myself up through the ranks, 
going to college part-time until I got my degrees. 

I spent 13 years in my career as a police chief 
and five years as a city manager. In May of last year, I was 
appointed by the Governor to be the Inspector General for the 
Youth and Correctional Agency. 

That Agency basically has the responsibility for 
the oversight of the investigative functions for the YACA 


agencies. We also do evaluations on wardens and superintendents 
who have been in place for five years or more. And finally/ we 
do other audits and investigations as requested by the Secretary 
of the Agency or Members of the Legislature. 

The Inspector General office itself is only 
three-and-a-half years old. My predecessor began it in one 
office in the YACA organization. 

In the last year, we have now expanded and have 
our own offices in a different location in a neutral area. 
We've started and have hired our first permanent employees. 
We've created a brochure describing the services of the 
Inspector General. And in that brochure also is a 1-800 number 
for those to call. 

Over last year, we have reviewed 112 cases that 
we've monitored. That's a 400 percent increase over the 
previous year, and we've also made some 150 recommended changes 
in the some of the policies and operations. I'm guessing about 
145 of those have been adopted, so we have made some headway. 

To my right is a fellow Board Member from the 
Youthful Offender Parole Board, Irene Raymundo. 

That's all I have at this time. I would be happy 
to entertain any questions. 

CHAIRMAN BURTON: Questions, Members of the 

How would you identify correspondence and 
communications to provide information that would qualify for 
opening an investigation? 

MR. WOOD: Generally speaking, if an employee or 


a person, or friend of an employee feels that some portion of an 
investigative process has not been done properly, they will 
write the Inspector General a letter requesting that we review 

Once we receive their letter, then we obtain 
copies of any information from the Department dealing with that 
specific incident, and if it meets the criteria, we'll continue 
to investigate that until we get an answer for the employee and 
the Secretary of the Agency. 

CHAIRMAN BURTON: Some people have been 
concerned, and I'll say this in the pejorative sense, but you 
have somewhat of a partisan background in whether or not you 
would be -- as do all of us here except, of course. Colonel 
Knight, who is just above partisanship — but basically, you 
know, there's a concern expressed that you might pick and choose 
who you go after. 

MR. WOOD: No, that would not be true. So far, 
the cases that we've accepted, I don't think you'll find any 
trend that shows that we're picking and selecting. 

The Inspector General, in some respects, is a 
very easy job. We receive the complaints. We investigate them, 
and we present facts to the Secretary or to the Legislature, and 
they make the final decisions on them. 

We have, to my knowledge, turned down very few, 
and only because they didn't meet a criteria. 

CHAIRMAN BURTON: What's your standard on 
investigation? What's the standard? You get a letter. How do 
you determine credibility? 


MR. WOOD: We don't determine credibility. We 
take it on face value. And then we proceed to look at it after 

CHAIRMAN BURTON: Anybody's doing anything wrong, 
you look at it? 

MR. WOOD: We look at it. 

CHAIRMAN BURTON: How do you determine whether — 

MR. WOOD: The first place we go is to see if 
it's been handled by the Department. If the Department has 
taken any action at all, then we review that action. After we 
review the action, if we feel that the investigative process was 
not done properly, or some other procedure has not been 
followed, then — 

CHAIRMAN BURTON: How about if they haven't taken 

MR. WOOD: If they haven't taken any action, then 
we would request they take action. If they do not want to take 
action, then we would ask the Secretary to have us go ahead and 
investigate it ourselves. 

CHAIRMAN BURTON: Are there witnesses in support? 

MS. RAYMUNDO: Support. 

Mr. Chairman and Members of the Senate Rules 
Committee, thank you for the opportunity to share with you my 
experiences while working with Mr. Wood. I'm here to support 
his confirmation as Inspector General. 

My name is Irene Raymundo. I reside in San 
Diego, California, and am an appointee to the Youthful Offender 
Parole Board. I have served in the San Diego Police Review 


Board and the San Diego Detention Facilities Advisory 
Committee . 

I am here today to support Mr. Wood and to share 
with you my experience while working with him during his tenure 
on the YOPB. 

For approximately a year-and-a-half , I consider 
myself fortunate to have worked with Mr. Wood. We conducted 
hearings for youthful offenders to determine their progress and 
their parole readiness. As you're aware, youthful offenders, 
male and female, come from all social-economic walks of life, 
and all racial and ethnic origins. 

Mr. Wood applied the laws and the regulations in 
a fair and impartial manner, regardless of the ward's 
social-economic status, race, creed, sexual orientation — 

CHAIRMAN BURTON: How many white wealthy wards 
are there in CDC? 

MS. RAYMUNDO: In the YA, you mean? We do have 

CHAIRMT^ BURTON: Some, yeah. 

MS. RAYMUNDO: But the majority, you're right. 
The majority are not. Normally the counties do a diversion 
program for them because of the attorneys and so forth. 

During our working relationship with Mr. Wood, he 
did not prejudge. He consistently made decisions based on the 
facts and evidence before him. And his professional and calm 
demeanor in conducting the hearings was appreciated and 
expressed by the staff in the YA, the wards' parents, as well as 
the victims. His tactful approach and considerate tone was also 


especially appreciated by the victims' organizations and victims 
themselves . 

Mr. Wood distinguished himself as a member of the 
YOPB and proved himself to be a consumate professional, and it 
was a pleasure to work with him. I found Mr. Wood to be man of 
integrity, compassion and purpose. I believe these attributes 
will serve him well as Inspector General, and I urge and 
strongly -- I strongly urge this Committee to confirm Mr. Wood 
as Inspector General. 

If I can answer any questions, I'll be glad 

CHAIRMAN BURTON: Next witness in support. 


CHAIRMAN BURTON: Senator Knight. 

SENATOR KNIGHT: As the Inspector General, who do 
you report to? 

MR. WOOD: I report to the Agency Secretary. 


MR. WOOD: Yes, sir. 

SENATOR AYALA: On that score, Mr. Chairman, to 
follow up, that's a problem, that the Inspector General reports 
to the Agency Secretary. 

I think the other investigations, we've had 
internal investigations, lacked a lot of substance. They really 

I don't know what happens after he turns in his 
report to his superiors. I have a bill that will allow the 
person in that position to report to the Governor directly and 


bypass all these bureaucrats in between. 

I might say that since Mr. Wood took over that 
position, it's like a breath of fresh air. So many good, 
competent reports have been coming in that I really support the 
work that he does. For the first time, I believe we're getting 
some real evidence of the internal investigations of the 
Department of Corrections. 

He has some real good investigating processes in 
progress today, and I'm getting some very good reports. I'm the 
Chairman of the Senate Committee on Prison Management. I do 
work very closely with Mr. Wood and others. I might say that 
it's been quite an improvement since he took that office as 
opposed to what it was prior to him being there before. 

He has no staff, by the way. He's doing it all 
on his own. So, I'm happy you asked him that question. 

SENATOR KNIGHT: I'm happy to have been the 
straight man for Senator Ayala. 

CHAIRMAN BURTON: Next witnesses. 

MR. JIMENEZ: Good afternoon, Mr. Chairman and 
Members. My name is Mike Jimenez, and I'm the Executive Vice 
President of the California Correctional Peace Officers 

While I'm not here today to give the endorsement 
of CCPOA, we generally avoid endorsing somebody for this type of 
office, I am here to speak as an individual, and I only use my 
title as a reference so you know that I do have interaction. 

CHAIRMAN BURTON: Identification purposes only. 

MR. JIMENEZ: I do have interaction with Mr. 


Wood. I have found him to be reasonable and objective in his 
approach on all the issues that have been brought to him. 

I think that I agree with you, Senator Ayala, 
that there are many problems within the investigative policies 
and practices of the Youth and Adult Correctional Agency. I 
think among those problems, though, Mr. Wood is one of things 
that are right about fixing that problem. 

I encourage an aye vote. While we don't see 
eye-to-eye on several issues, I still support him as an 
individual, and I agree with the lady that testified before me. 
I believe that he is a man of integrity, and that he will do a 
lot to correct some of the ills of those investigations. 

Thank you very much. 

CHAIRMAN BURTON: Witnesses in support. 

MS. ELVEY: Hi, I'm Maggie Elvey, and I have a 
personal experience, being thrown into the world of victims in 
1993, when my husband was murdered by two juveniles. I now have 
the misfortune of attending yearly Youthful Offender Parole 
Board hearings, and was fortunate enough to have Mr. Wood in 
1996 at one of the hearings on one of the youths. 

I feel that he was very — had a very controlled 
meeting and was very knowledgeable. And it's a scary thing for 
victims to be sitting in these meetings every year, not knowing 
the people. He showed no prejudice or disrespect to either 
side. He was fair to both of us. He was sincere. He was 
thorough, and he was truly concerned. He made it a lot easier 
to be there and to go through this every year. 

CHAIRMAN BURTON: Thank you, ma'am. 


Other witnesses in support. 


MS. MOLDEN: Hello to Members of the Committee. 
My name is Verronda Molden. I'm here on behalf of Regis Lane, 
Executive Director of MILE, Minorities in Law Enforcement. • 

We are here to strongly support the confirmation 
of Mr. Lloyd Wood. We have had the opportunity to meet with 
him, and we have had become very impressed with his law 
enforcement record in the community, as well as his knowledge on 
the issues pertaining to Corrections. 

Our organization is a youth advocate organization 
dedicated to helping California's urban youth. Our goal is to 
secure a significant reduction in the disproportion of arrests 
and incarceration rates among the urban youth. 

Our agency is representative of the Los Angeles 
Black Peace Officers Association, the Latino Peace Officers 
Association, the California Womens Peace Officers Association, 
the California Correctional Peace Officers Association, and the 
Asian Peace Officers Association. 

Again, we strongly encourage that you confirm his 
appointment. Thank you. 

CHAIRMAN BURTON: Other witnesses in support? 
Witnesses in opposition? 

MR. TORRES: Arnold Torres, partner with Torres 
and Torres. We're a public policy firm, and we occasionally 
will come in and testify on nominations if, in fact, they raise 
a major concern to us in the work that we do. We do a 
tremendous amount of pro bono work on a number of issues, and 
the work that we've done recently on crime and gang prevention 


leads us to this hearing before you today. 

I've appeared before this Committee on two other 
occasions, testifying in opposition to Dr. Molly Coye, the 
Director of the Department of Health Services. She's no longer 
with the administration. She lasted about approximately two 
years after the Senate confirmed her. We felt vindicated with 
that record. 

And the second was Mr. Norm Shumway, the nominee 
to the Public Utilities Commission/ who we had worked with and 
against during our years in Washington, D.C., when he was a 

So, I provide you this background to underscore 
to you that the process of confirmations is not new to us. We 
did a tremendous amount of testifying before appointments by the 
Reagan administration when I was in Washington, representing the 
country's largest Hispanic civil rights organization, the League 
of United Latin American Citizens. So, we don't take our 
testimony lightly, and we understand and respect this process. 

Oftentimes, when minorities come before you, they 
come to testify about discrimination, and they come to raise the 
fact that they have been wronged by nominees, by 
administrations. There is some concern on that front, but I 
want to begin by indicating to you the major reason for our 

In the last three to four years, the Department 
of Corrections — and it's good that the lobbyist for the 
Association of Correctional Officers is here. I was quite 
surprised that they would testify on a nomination for an 


Inspector General, since that has never been the case with the 
Inspector General at the Department of Justice at the United 
States federal government level. So, I'm very surprised and 
taken somewhat aback. I can only attribute that to, perhaps, 
some interest in the politics of this nomination at this point. 
However — 

CHAIRMAN BURTON: Or the respect for the nominee. 

MR. TORRES: Absolutely, the undying — having 
nothing to do with their position, respect for the nominee, 
without a doubt. 

We have been reading for the last three to four 
years a tremendous amount of concerns with the work of the 
Department of Corrections and some of their officers. There 
isn't — every other month, there's a major article in major 
newspapers throughout this state about abuse, excessive use of 

Whether it happens or not, it's vitally important 
to understand what it is does to the psyche and to the attitude 
of people in a democratic society. Law enforcement people, 
whether they work in an institution or outside in a uniform, are 
the most powerful people in a democratic society. They carry a 
badge and they carry a gun. They can use them and they can 
answer the questions after the fact. 

It is so imperative that their respect and their 
work be beyond reapproach. When it is not, democracy is under. 
attack. It begins to hurt it immensely. 

We are very troubled by the fact that there have 
been very, very celebrated cases with Corcoran and other 


institutions in this state along those lines. 

We look at the Department of Justice at the 
federal level, the background of the Inspector General there. 
Former prosecutor, Michael Bromwitz, federal prosecutor for at 
least 15 to 20 years prior who his position as Inspector 
General . He has a tremendous amount of prosecutorial 
experience . 

It is the same thing with the Office of the 
Inspector General -- Office of Professional Responsibility 
within the Department of Justice. They have a counsel, and that 
counsel also has extensive legal background. 

We are very troubled by the fact that, 
regrettably, Mr. Wood does not have that background. 

When we testified and brought it to the attention 
of Ms. Justice, the Governor's appointments secretary, she was 
somewhat taken aback that we would even raise that as the 
standard of what the Inspector General of this Agency should 
have in terms of background. 

We believe this is absolutely imperative. 
Clearly, Senator Ayala's two bills, SB 1913 and SB 1978, are two 
very, very public overtures on the part of the Senator to try 
and professionalize the operations of that office. Why? Not 
because he's a lawyer. He's not. But because it is imperative 
that that office operate . at an extremely high level. 

Let me share with you a memo that was written by 
my staff to me as of April the 7th. "On April the 7th, we found 
out that one person doing an investigation for that office 
happened to be the janitor of that institution, receiving no 


special training." They had followed up on that. 

SENATOR AYALA: He was what? 

MR. TORRES: He was the janitor. It was 
mentioned that in one situation, a maintenance employee was 
doing the investigation. 

Now, if this information is wrong, we'd be more 
than happy to give you the staff people that we discussed this 
with so that there are no repercussions to those individuals. 
But because this is an extremely — because this has received 
political and partisan concerns on the part of this 
administration, I would say that there will be some 
repercussions for some people who do not support Mr. Wood, or 
anyone that gives us information that would hurt Mr. Wood's 
possibilities of being confirmed by this Committee, or forwarded 
by this Committee as confirmation by the Senate. 

So, with due respect to you. Senator, I am 
surprised that anyone would consider the work being done at that 
office at this time to be a massive improvement. Over what? 

If we're talking that the standard prior to Mr. 
Wood was nothing, then I would say virtually anybody could make 
some improvements in the operations of that office. 

But clearly your bill, 1913, if there was a 
go-getter in that position, and there was someone who understood 
what their responsibilities needed to be, SB 1913 should not be 
necessary. This is an extremely common sensical piece of 
legislation. The Inspector General should take the initiative 
to take those types of actions. Yet, that is not the case 


So, we are extremely troubled by that lack of 
background. It is going to be imperative that, as our number of 
inmates grow in our state prisons, and the confrontations 
between correctional officers and others and inmates continue to 
escalate, which clearly, it's a track record that's underscoring 
that left and right, regardless of what the CCOA [sic] may 

These are serious problems. Why? Because these 
are human beings confronting human beings. No one's perfect, 
and mistakes will be made. 


Can you give me what the qualifications are that 
you expect of an Inspector General? 

MR. TORRES: I expect at a minimum, Mr. Knight, 
Senator Knight, that they should have at least a prosecutorial 
background, as Mr. Bromwitz, currently Office of Inspector 
General, Department of Justice, has. 

Whether you worked for a D.A. 's office, or you 
have worked in private practice and you litigated, you've got to 
have someone who's done investigations. You've got to have 
someone who actually knows that process of investigative work. 

With all due respect to Mr. Wood's background, 
that simply is not underscored in the positions that he's held. 

SENATOR KNIGHT: That's not a requirement, but 
that's your belief as to what the requirements should be for 
that position? 

MR. TORRES: That's true. So, there are no 


SENATOR KNIGHT: None stated. 

MR. TORRES: That's right, there are none stated 
for that position even in the legislation that created this 

All I'm saying is that I'm not aware that the 
Office of Inspector General at the Department of Justice has any 
written requirements as well, but the job requires this type of 

Now that, by all means, is open to some debate, 
but I would think that common sensically, that's the kind of 
person you want, because that's the kind of things they're going 
to have to be doing. A person who has that kind of background 
allows them to do their job much easier. 

SENATOR AYALA: Mr. Wood, how long have you been 
in that particular office now? 

MR. WOOD: One year, sir. 

SENATOR AYALA: You made a number of 
investigations, and you have turned the report in to the proper 
authority; correct? 

MR. WOOD: Yes, sir. 

SENATOR AYALA: Have you had a chance to review 
these reports? And if you have, have you found them short? Do 
you feel they're not doing the job? 

Have you seen the reports he's turned in? 

MR. TORRES: No, sir. 

SENATOR AYALA: How can you judge a person on the 
strength of his background if you're not aware of the kind of 
work he's doing? 


MR. TORRES: I would judge it quite simply. If I 
was to have reviewed those reports and come to you with an 
opinion, I would have been absolutely guilty of hypocrisy. 

I am not a prosecutor. I'm not a D.A. 

SENATOR AYALA: You're doing it now. 

MR. TORRES: No, I'm not. I'm simply saying that 
the position of Inspector General should carry with it people 
who have backgrounds that allow them to do their job. 

SENATOR AYALA: Before you start underestimating 
his ability, you should know whether he's doing the job or 
not. His background may be not that of investigator. He's 
been a policeman, in law enforcement all his adult life, I 
guess . 

And I'm not trying to defend him. I'm just 
defending the report he turned in to me. I think they're a heck 
of an improvement over what I got before from the other 
investigating forces. So, he's quite an improvement. He must 
know what he's doing, because no one questions what he's doing. 

I don't have to defend him because he can defend 

I don't understand how you can criticize him, not 
knowing the kind of work he's doing today, one year he's been in 

MR. TORRES: Mr. Ayala, I don't think that our 
criticism is of Mr. Wood individually at this point. 

What we're saying is that he is being confirmed 
for the position of Inspector General of this Agency, the 
Correction Agency. The Inspector Generals in all other 

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But if you don't have a beef with the guy, but 
it's that we -- and that may have been a mistake of the 
Legislature at some point in the past -- did not set up criteria 
for this position. So, you can't fault this person for not 
fulfilling the criteria that's not there, but if, in fact, he's 
been doing the job -- and I don't know if he's doing job or not, 
although I'm much of Senator Ayala's opinion, because I focus on 
different things, he focuses on this — but then, whether or not 
he went to law school, didn't go to law school, whether he did 

In fact, he's a cop, so in theory he should know 
how to investigate. I would assume that there probably should 
be some attorneys in the office of the Inspector General that 
would give the legal advice on what happened. 

So, I think that the basic fault that you seem to 
have, if it's not with him, is with the fact that the initial 
legislation did not set up, which it probably should ''have, 
criteria that we do in some things, you know, at least three 
years as something, and four years of something else. 

I'm just wondering, do you have any — 

MR. TORRES: Yes, we have. There were two major 
points that we're raising. One, we wanted to raise the ones 
that we've been discussing now. 

CHAIRMAN BURTON: We'll see if you guess where I 
was going. 

Do you have any specific things? In other words, 
this guy could have been a lawyer, and could have been the D.A. 
of San Francisco County, and if he did bum job, that would do no 


good. Do you have any specific places or instances where you 
believe he fell short of the mark? 

MR. TORRES: Our second point goes to our concern 
with some actions that Mr. Wood undertook when he was with the 
Youthful Offender Parole Board. 

Let me finish these points, then I'll go into the 

I certainly appreciate and understand where you 
and Senator Ayala are going in response to our testimony. We're 
not saying to you that the problem with the nominee is as a 
result of legislation that wasn't specified enough. 

What we're saying is that this Legislature has 
had serious problems with the direction of Agency for some time 
now. It has problems with people within other smaller 
departments within this Agency. 

Our concern is that when you have that type of 
history with regards to the question and doubt and concerns with 
the direction being provided, now that there's somebody else in 
the position, and previous Director is gone, clearly, any 
improvement over what was done in the past is going to be cited 
as somewhat — probably a little bit better than what it really 
actually is, when there are really no standards that we're 
looking at. 

All we're saying is that when you consider a 
person for this position, recognizing to some extent on the part 
some of you today, saying that maybe we should have been more 
specific, what we're saying is that when a person coming into 
this position now, at a time when there's so much controversy. 


so many difficulties within agencies, both at Corrections and 
the Youth Authority, we just simply believe that there are other 
people who can certainly do this job much better. That is the 
concern we have with regards to the first point. 

The second point, and why the second point — why 
our first point becomes even more troublesome for us, is, I 
seriously doubt that many of the — and I certainly could be 
wrong; it wouldn't be the first time — but I seriously doubt 
that the minorities that have come before you today, I do not 
believe that they would have come up here to testify in support 
of Mr. Wood if they had not been contacted by the Governor's 
Office and told that we were testifying and raising our 
objections to him, and that we happened to be a Latino, and that 
we had raised our letters and our concerns to the Governor's 
Office directly. 

So, with all due respect to their testimony, I 
think they have done what they were asked to do. I think that's 
very, very good, but I think it's important that this Committee 
puts that in perspective. 

Our second point deals with the fact that we 
first came to Mr. Wood — Mr. Wood first came to our attention 
with regards — as a result of the Corrections problems, and 
then as a result of the firing of an individual at the Youthful 
Offender Parole Board. 

We raised a number of concerns, and we discussed 
it directly with the Governor's Office. The Governor's Office 
told us that the Chairman of that Committee, of the Youthful 
Offender Parole Board, Senator Presley, was fully aware that the 


Executive Officer had been fired, and that he had no problems 
with that. 

Well, they told me to go ahead and ask Senator 
Presley. I asked Senator Presley directly. Senator Presley 
informed me that at no time had he been informed that the 
gentleman had been dismissed by the Governor's Office. And if 
he had been told that he was about to be dismissed, the Senator 
said that there was no grounds from his side as to why the 
gentleman was about — why the gentleman had been dismissed. 

Senator Presley also informed me that Mr. Wood 
had asked that this individual's record be placed on the agenda 
for a meeting of the Youthful Offender Parole Board. 
Regrettably, Mr. Wood did not come to that hearing that day. I 
believe he had a personal difficulty. 

But Senator Presley confirmed to me that had he 
come, and had in fact this been a discussion, the votes were not 
there to remove the Executive Officer. In fact, according to 
Senator Presley, he was not aware that there was one other vote 
besides Mr. Wood's effort to remove the Executive Officer from 
that position. 

Now, Senator Presley is conspicuously absent from 
this process. He has not sent a letter of support, yet there is 
somebody else from the Commission, from the Youthful Offender 
Parole Board that has testified in his support, a person who's 
also going to be renominated to serve on that Board again. 

Now, not casting aspersions on anyone, that is 
too much. That is too much of a coincidence. Enough said. 

So, I think the concern is very, very much a 


legitimate concern on our part with what's going on here. When 
you couple, in our opinion -- and we could have an honest 
disagreement between us today -- the job that the Inspector 
General should be doing, the type of background that we believe 
that they should have, with what we firmly believe, and do not 
take lightly, is actions that, in our opinion, are unfair 
towards minorities. 

Thirty percent of the inmates — more than thirty 
percent of the inmates are Latinos in Corrections. More than 
thirty percent of the correctional officers are Latinos. 

I know that some will say that Mr. Wood's best 
friends are Latinos. I understand that he has Hispanic 

But that does not speak to the example that I 
have written about in our letters that you have copies of that 
we sent to the Governor's Office. It does not speak to the fact 
that we firmly believe that there was a problem in this 

CHAIRMAN BURTON: With all respect, if either he 
is the best friend of some Latinos, or some Latinos are his best 
friends, his grandchildren are Latinos, and then you balance 
that off against the fact that either he didn't like a guy and 
got the guy canned, and that guy either happened to be a Latino, 
or because he was Latino, that doesn't mix with me. 

I can see how, and I'm not defending him, but I 
can see how a person might want to get rid of an Executive 
Director. Having been on a commission, I've wanted to do it 
myself, but that might have been something that shouldn't have 


been done, or something that was done on a personal basis in a 
fit of pique. 

I don't think one would necessarily relate he got 
rid of him because he was Latino. 

MR. TORRES: Let me put it in this context. 

I think that as this state grows, and as more 
Latinos get into professional jobs of being Executive Directors 
of agencies within government, et cetera, it's going to be 
pretty difficult to raise the example that I've raised and 
attribute to it the concerns that I have. 

However, when it comes to state government and 
the State of California to this day, there are very few Latinos 
that ever get to these positions, let alone an appointee of this 

This gentleman was an appointee by this Governor. 
In fact, this gentleman was not the first choice of Senator 
Presley to select. And yet it was this gentleman who the 
Governor's people told Mr. Presley, we think this is a better 
person for you to appoint. 

Now, the whole thing revolves around the fact 
that he was a Latino. Our concern is that if there were a lot 
of other Latinos in the state system, I'd say, just like you 
said. Senator, hey, you can't help but step on one. But that's 
not the case when it comes to positions. 

CHAIRMAN BURTON: No, my point is, and I think 
we're getting somewhat far afield from whatever the issue is 
here — which seems to be more of a macro issue than the micro 
issue here — is that a guy got fired, rightly or wrongly, but I 


think he might well have been fired, rightly or wrongly, black, 
Latino, Asian, or me. That's the point I'm making. 

In other words, I don't think the guy got fired 
for being a Latino. I don't know. He might well have been, but 
I think that's kind of a quantum leap, assuming, unless he 
disowned whatever parent provided him with Latino 

So, I don't know if that's necessarily fair, but 
I think the point is that he was put in this job. 

I've got a couple questions that I do want to 

MR. TORRES: I would just conclude that, to 
bring it back to your topic, as you said that you felt that we 
were somewhat afar. 

You know, I underscored in the beginning. Senator 
Burton, that we do not come before this Committee often. It's 
not -- the issue of discrimination is not something that we 
throw out every time a Latino is canned. That's just not the 

I believe as you I believe, there are times when, 
regardless of who would have been there, the person deserved to 
get canned. 


MR. TORRES: I'm simply saying to you that in 
view of the fact that we discriminate ourselves when it comes to 
bringing issues like this to this Legislature, whether it's 
before this Committee or any committee of the Legislature, both 
the Assembly and the Senate, we think that we have an extremely 


high standard when we come and we say: this is a' problem. 

Our analysis of this problem, and we researched 
this stuff quite extensively, we reach no other conclusion but 
the one that we're sharing with this Committee today. We do 
believe that that firing was because of the ethic background of 
the individual. 

We coupled that concern with our first point, 
that when you have somebody in that position that has to be 
driven more by prosecutorial standards — and yes, prosecutors 
are very discriminatory in many cases — but when you have, in 
our opinion, a problem already, and you've got standards that 
are not as high as they should be, regardless of whether it's in 
the legislation or not, this sends a red flag to us that compels 
us to come before you and ask that his nomination not be 
confirmed by this Committee. 

CHAIRMAN BURTON: This may or may not be a 
rhetorical question. 

Had he been a lawyer, D.A. or assistant D.A. for 
years, was on the Board, fired the Latino. He's here before us 
now to be Inspector General. What's the opposition? That he 
fired somebody for racial bias? 

In other words, the two things are irrelevant. 
If he fired a guy for racial reasons, if he was an ex-Chief 
Justice of the Supreme Court, in my judgment he would not be 
getting my vote. 

If we want to get into the janitor doing the 
investigation, but if he was, quote, unqualified, or at least 
not professionalized as you see it, but he hired this person and 


went to the mat with the Governor to get a Latino in there, then 
he would all of a sudden be qualified. 

MR. TORRES: I would say to you that when we come 
before any committee of the Legislature because discrimination 
is something that people throw around all the time, there is no 
way that I would come before this body unless I had absolute 
evidence. If I had absolute evidence, I would advise the 
Executive Officer who was fired to file a lawsuit against the 
state. That's the point that I'm raising to you. 

But I can't come in here and say, our right, that 
this man committed discrimination against an individual. I 
believe that based on the analysis that we did, there is enough 
question there that has us -- that we feel compelled to bring it 
to your attention. 

Now, when you have that background of behavior, 
coupled with where the position is going — 

CHAIRMAN BURTON: But they're not relevant. 

MR. TORRES: Of course they are. 

CHAIRMAN BURTON: You're saying that you have a 
guy who may well have fired somebody on a racial basis, and 
because he isn't a prosecutor, it's a bad deal. But if he's a 
prosecutor, it's okay? 

MR. TORRES: No, it would never be okay. But I'm 
simply saying to you. Senator, that you wouldn't today say to 
me, if I had even more evidence, I'm not going to approve the 
guy. I have to have something in a court of law. I don't have 
that evidence in front of me. 

CHAIRMAN BURTON: You haven't really put anything 


in front of us except your supposition. You haven't, have you? 

MR. TORRES: I think that I have made an 
extremely compelling argument about what the position is. In 
view of all the problems that we're having in the Corrections 
institution in this state, I mean, I think that's unbelieveable 
problems there, and I think that speaks to itself. 

CHAIRMAN BURTON: You think he's incapable of 
dealing with them. 

MR. TORRES: I believe simply this, that there 
are many other people who are better positioned. That's the 

CHAIRMAN BURTON: I'm sure there are. 

SENATOR AYALA: First of all, Mr. Torres, you 
should have been an attorney. You do an excellent job. 

MR. TORRES: I don't know. The Chairman didn't 
seem to think that I had a very compelling argument. 

CHAIRMAN BURTON: But you did a good job with 

SENATOR AYALA: I know for sure that the 
gentleman you referred to, the Board asked him to come before 
them. And Mr. Wood wasn't there because I understand he had a 
wife who was ill at the time. 

This gentleman was called, and he was given time 
to straighten out because they had some problems with this 
individual. After that time of the extended time frame was 
performed, he was called into the Governor's Office. 

Mr. Wood says he had nothing to do with that. I 
assume that that's true. He went before this lady, I've never 


met her, the appointments secretary for the Governor. And he 
was fired by her. 

MR. TORRES: That's right. 

SENATOR AYALA: Now, I don't know what authority 
that lady has to fire someone that's not under her jurisdiction, 
unless the Governor gave it to her. 

He reports back to Senator Presley, who's the 
Chairman of the Commission. Senator Presley deserved better 
treatment than that. I think it was so unprofessional by Ms. 
Justice or the Governor, if he was behind this, to fire this 
individual without informing the Chairman of that Commission, 
Senator Presley. 

Presley was not aware of the fact that this 
individual was going to get fired. I think that the lady 
indicated that later, that Presley was not aware of the fact 
that he went in to see her about something, and he came out 
without a job. He reports back to Presley and says, I'm gone. 

He was the Chief of Staff for Senator Presley. I 
think it's elementary courtesy, dictated by the administration, 
to notify Senator Presley, and they didn't. 

To that extent, I agree with you. But from then 
on, I don't quite agree with what you've said, besides those. 
Those are accurate statements that you made. I think the 
administration owes Senator Presley an apology because they were 
so unprofessional in the way they did it. And we can't control 

But they were having problems with this 
individual's performing, but they gave him the extended time. 



And between the time that the extension was given, he was called 
into the Governor's Office and he was fired by this appointments 
secretary, who, again, I don't know where she got her authority. 
I guess Governor gave it to her. 

But it's unprofessional to treat a Chairman of a 
commission, appointed by the Governor, in that fashion. That 
much, I would agree with you. 

MR. TORRES: I just give this as a concluding 
statement, and then you can query Mr. Wood and he can defend 
himself in response to my comments. 

I believe -- again, as I've said, I've been 
involved in so many of these types of situations that I seldom 
ever lend our name to supporting someone unless we do our own 
analysis of what the problem is. 

I believe there was a very serious problem with 
the way the gentleman was dismissed. I think that in our 
opinion, there is no doubt that Mr. Wood had something to do 
with it, because he had asked that the item be placed on the 
agenda. That's a confirmation, in our opinion, that there was a 
problem there. 

There are other people that we spoke to at this 
Youthful Offender Parole Board that I wish we could share with 
you, but then we'd be compromising them, and you know that there 
is a lot of retaliation in the way the system works. 

We checked out Mr. Wood's background in Pomona. 
We received a lot of concerns with people that we spoke to there 
that said that there was pattern of making disparaging remarks 
about Latinos. We spoke to people in the City of Pomona that 


did confirm to us that there were disparaging remarks made of 
Latinos on several occasions by Mr. Wood. 

SENATOR AYALA: I also did that, and I found no 
problems with the Council lady, who happens to be Hispanic. 
They had no problems while he was Chief, and also City 
Administrator. I looked into it. 

In fact, I've got to tell you a little story 
quickly. I ran into the gentleman at the airport in Ontario 
here about three months ago, and he was in civilian clothes. 
We started a conversation. He says he was a sergeant in the 
Pomona P.D. I asked him what he thought of Mr. Wood. 

He said, "Why, he's the one that gave me my 
advancement. I'm really thankful," and that gentleman was a 
black person. 

So, he was grateful to Mr. Wood that he promoted 
him to sergeant. I hope he was qualified, by the way, not 
because he was black, or brown, or purple, but he owed that to 
Mr. Wood. 

I was checking him out in my district. 

So, you might have a lot of problems here with 
Mr. Wood's confirmation, but they're all just hearsay, giving no 

This is not court of law, but I think that before 
we can fire someone, we shouldn't be like the administration. 
We should have something concrete to do it on. 

MR. TORRES: I'm glad that that is the standard 
that this Committee has. It does not appear that that was the 
standard that was applied when the Executive Officer was 



My concluding comment is that, you know, a lot of 
damage has been made to this individual. I don't think that's 

But I ask you now look at the bigger picture as 
well. And the bigger picture is the fact that I believe that 
the Inspector General position in government is one of the most 
important positions in government that we have today. If they 
do their job well, they hold government accountable on a 
day-to-day basis. If they don't do their job well, then you've 
got a much more serious problem of accountability on behalf of 

And if Mr. Knight and the Republican Party is 
concerned about government, then I would think that they would 
be extremely concerned about the necessity, the absolute 
necessity of making sure that government is held accountable. 

I do not feel, again, in concluding, that 
Mr. Wood is the best person for this position for the reasons 
that I've stipulated. It would be my hope that this Committee 
would agree. 

However, he serves at the pleasure of the 
Governor. Perhaps we will have a new Inspector General and 
maybe we can deal with that issue at another time. 

Regrettably, we will not be able to deal with the 
reputation of the Executive Officer who was dismissed, in our 
opinion, phenomenally unfairly. 

Thank you very much. 

CHAIRMAN BURTON: Mr. Wood, is your office 


looking into the Corcoran situation? 

MR. WOOD: No, sir. We have not been asked to do 

CHAIRMAN BURTON: Jesus! Wouldn't it be 
something that would happen on your own motion by reading the 

MR. WOOD: We're governed by the policies and 
procedures that are approved by the Agency Secretary. 

When the Corcoran process happened, it was prior 
to me coming here. But the fact was that there were so many 
other agencies investigating it, that they did not have the I.G. 
investigate it, and they actually removed their own internal 
affairs people from investigating it, and allowed it to continue 
with the federal and local agencies. 

CHAIRMAN BURTON: First of all, you said you 
didn't go in because nobody asked you. Now you tell me you 
didn't go in because other people were there. Which was it? 

MR. WOOD: First, we were not asked to go in at 

CHAIRMAN BURTON: Do you have to be asked if you 
read the paper? You have to be asked? The Inspector General 
can't look into something on their own motion? 

MR. WOOD: Not without the approval of the 
Secretary, nothing of that magnitude. 

SENATOR AYALA: That's the problem we have today. 
Unless he's told to investigate something — 

CHAIRMAN BURTON: Then you've got almost a 
worthless job. 


SENATOR AYALA: I've got a bill that would 
correct that. 

CHAIRMAN BURTON: Is he going to sign it? 

SENATOR AYALA: He didn't sign the last one, a 
similar bill. 

CHAIRMAN BURTON: If you can't look into a 
department unless the department says you can look into us, 
that's beautiful. 

MR. WOOD: If the Secretary approves it, we get 
many things — 

CHAIRMAN BURTON: If you can't look into 
something without one of the people who's going to get maybe 
nailed, saying you've got to look into, then there's no reason 
even to have you. Because he has you look at whatever he or she 
wants you to look at. 

I'm not saying that it's your fault. It's 
somebody's fault. 

MR. WOOD: As I understand it, and I'm probably 
out of my league, but it's the Agency Secretary's position to be 
the oversight for all of these units. 

CHAIRMAN BURTON: The purpose of an Inspector 
General is to be your own oversight. Then maybe it's good pay, 
but it's not a pretty strong position, because the Inspector 
Generals that have been created in the federal, I mean, the 
reason they're there is to look at an agency. To look at what's 
going on. Find out if they're screwing up. 

It took for years to get an I.G. They had them 
for every agency, and then to finally get one for the Pentagon, 


it took years because the Pentagon had the clout to stop it. 

But it'd be like saying to have an Inspector 
General for the IRS, but the heads of the IRS doesn't want 
anybody to looking at the way they do business, and he never 
gives his approval. 

Senator Knight. 

SENATOR KNIGHT: That's all very well and good, 
but that's something that I think needs to be cleared up 
legislatively. I don't think that's germane to the job at hand. 

CHAIRMAN BURTON:- Yes, because it's almost like, 
what do we need the job for if that's the way it works. 

SENATOR KNIGHT: Is that within our purview, to 
eliminate the job? 

CHAIRMAN BURTON: It's within our purview not to 
confirm if somebody's sitting in front of me, yes. That's why 
he's here. 

I'm not blaming him for it. I told him that I 
was not. 

My decibel level is not aimed at Mr. Wood. It 
ain't his deal, but it's aimed at the process where it's like 
you have an Inspector General to look at the Senate, but they 
can't look it unless we say they can look at it. 

SENATOR KNIGHT: I had some other questions. 

SENATOR HUGHES: On the same, you said on the 
federal level, the Inspector General was really independent to 
do what they wanted to do, to look at the agency. 

I know that there's an Inspector General on a 
local agency in Southern California, and there is no job 



Is there a job description, and rules and 
regulations in this position that clearly indicates what 
Mr. Wood can or cannot do, with or without approval? 

That's my question. 

MR. WOOD: The legislation allows us to have 
oversight into investigative processes, to evaluate wardens, and 
to do other audits and investigations as requested by the Agency 
Secretary or Members of the Legislature. And all of this is 
based on the approval of procedures adopted by — drafted by the 
Inspector General and approved by the Agency Secretary. 

SENATOR HUGHES: But it says that the Agency, 
what you just said, that the Agency Secretary has to approve. 

MR. WOOD: Yes. 

SENATOR HUGHES: Or the Legislature. The other 
part you said, or a Member of the Legislature or the Legislature 
directs you to do — 

MR. WOOD: Can make a request. 

SENATOR HUGHES: A Member, any Member. 

CHAIRMAN BURTON: If some Member of the 
Legislature wrote you a letter and said look at whatever, then 
you've got to do it? Or do you need somebody else's 

MR. WOOD: Basically it still has to go by the 
Agency Secretary. 

CHAIRMAN BURTON: A little gap in the law. 

SENATOR AYALA: Mr. Chairman, I asked to have an 
investigation at the Stockton Youth Authority. A correctional 


officer allegedly used three cans of pepper spray on one of the 
kids. He ended up in the hospital. 

Three months later, nothing's done because the 
Director or the acting Secretary of the Agency didn't authorize 
him to go ahead. 

Finally I said, I want you to do it now, and he 
completed the investigation partially within two or three 
weeks. But they've been sitting on him because that's the way 
law reads. It's a joke. 

CHAIRMAN BURTON: That's what I was saying. 

Senator Knight. 

SENATOR KNIGHT: Thank you, Mr. Chairman. 

Back to the issue at hand, recognizing your 
concerns and the concerns of all of us as to the authority, 
given the responsibility of the I.G., but there have been some 
accusations by the gentleman who spoke against Mr. Wood, and 1, 
too, was under the impression that he was an attorney. I don't 
what gave me that impression. Maybe it was intentional, maybe 
it wasn't. 

CHAIRMAN BURTON: He never said he was. 

SENATOR KNIGHT: Oh, I know he didn't say he was 
an attorney. 

The position of I.G., you as a police chief, you 
did not have any occasion to do any investigation or consort 
with your I.G. at the time as you were a police chief, 
Mr. Wood? 

MR. WOOD: Well, as a police chief, in my first 
department I created the Internal Affairs Bureau, as there was 


not one before I got there. And both of those r'eported directly 
to me. 

When I reached my third department as a chief, 
the Internal Affairs reported to a captain. I transferred that 
so it reported directly to me, so I had control over all of the 
investigations, that they all went through me and did not go 
through a captain. 

I've also in my experience been the captain of 
the Detective Bureau, so I've had extensive investigative, and 
oversight, and contact with Internal Affairs. 

I'm old enough, I was around when some of these 
first things were created, like the Police Officers' Bill of 
Rights, and some of those. I was there at the beginning. 

SENATOR KNIGHT: So, in your organization today, 
you do have people with prosecutory capabilities, experience, 
that do the investigations? 

MR. WOOD: We have access. We don't prosecute. 
We present the facts to the Agency Secretary, who then 
recommends adverse action be taken. We make our 
recommendations, and that type thing. 

Primarily, we do have access to attorneys that 
advise us as we go through the process. Most of my people that 
I hired, which is not many, I think we have three or four is all 
I have, those people are our management people that are equipped 
to do audits. I have one ex-military I.G. that works for me. 
Another person who's been in charge 50-some auditors at one 
point in time. And a third person I have is a man who has 
extensive investigative background and teaches investigations to 


year . 

college and police officers. 

SO/ I've got the good grounds. I have the 
referral of attorneys to work with me. I have one attorney at 
all times that is available to work with me and review the 

SENATOR KNIGHT: That's the extent of your 

MR. WOOD: At this time, yes, sir. 

SENATOR KNIGHT: And you've been there for one 

CHAIRMAN BURTON: How many employees? 

SENATOR KNIGHT: About three or four. 

CHAIRMAN BURTON: No wonder he had to use a 

MR. WOOD: There's no janitor ever did 
investigation in this department. 

SENATOR KNIGHT: A lot of accusations have been 
made here, and some of them sometime ago. I would suspect that 
if there was any discrimination a year or so ago, or at least 
over year ago, that that should have been taken up at the time. 
To bring that up today, and other issues such as janitors 
conducting the investigation without any proof, I .think, is 
rather presumptuous on an individual's part to degrade the 
character of the individual that we're trying to approve today. 

I have been an I.G. within the military. And the 
I.G. within the military does not have to be under the JAG or 
even associated with the JAG. 

So, the requirements for an I.G. I think are a 


little bit different in the fact that that should be an 
organization and an individual that is open, that has the 
ability to accept complaints from anybody, regardless or 
independent of chain of command, and be able to assess and 
evaluate those complaints, and do with them what is necessary to 
satisfy that complaint. 

CHAIRMAN BURTON: I want to read this thing, and 
I've got some real problems, and they're not necessarily with 
you. They're with what this system is. 

Now, in our binder, it says, I.G. responsible for 
reviewing department policy and procedures for conducting 
investigations and audits of investigatory practices and other 
audits, and investigations of Corrections, Youth Authority, 
Prison Terms. Youthful Offenders, the Corrections, as requested 
by the Secretary of Youth and Adult, or a Member of the 
Legislature .pursuant to the approval of policies to be developed 
by the I.G. with approval of the Secretary. 

Now, I'm not reading the statute. I'm reading a 
summary, but that means to me that conceivably we gave statutory 
authority for you, and I think you almost should have been able 
to do something if you read about it in the paper. But if a 
Member of the Legislature wrote a letter asking you to look at 
something, you could do it. 

But then it further says, policies developed by 
the I.G. with the approval of the Secretary, which means the 
Secretary had to approve your policies, not had to approve your 
investigations, unless the policy he approved said, "We won't 
investigate unless you approve." 


Is that how it works? 

MR. WOOD: That's how it works. 

CHAIRMAN BURTON: That isn't what the law said. 
That allowed the Secretary not to have you look at anything that 
might embarrass him or her. 

Again, this isn't you. 

MR. WOOD: I understand, Senator. 

CHAIRMAN BURTON: Make believe you're O'Brien. 

MR. WOOD: One of the exiting philosophies at the 
time was that the department themselves should have the 
opportunity to correct whatever problem there was. 

It's on that basis we were — and the one at 
Stockton that Senator Ayala was talking about, we were 
restricted from going out because the policy was, or the theory 
was, let the department do it first instead of us investigating 

Since time has passed now, the new Secretary has 
now ordered us to go investigate that case, and we have. 

CHAIRMAN BURTON: I'll tell you what my 
inclination is. 

I haven't read Senator Ayala 's legislation, and I 
don't necessarily want to hold anybody hostage, but I wouldn't 
mind seeing either the Agency head or the Governor, if they're 
that interested in you, to make a change in that. 

We said you can investigate under these 
circumstances, and they come up with a policy that says, but 
only if we approve of it, which wasn't the type of policy, I 
believe, that the Legislature had. It might have been policies 


so that even though you're part of the department or the Agency/ 
that you're not waking up a warden in the middle of the night 
and saying, "Let's see all of the personnel charts on these 
guards." That you did it during normal business hours and 
things like this sort. 

But they've got a policy that in effect says, "If 
we don't want them to look at it, they can't look at it," and 
that's not what it's about. 

The policy should be that you do it in an orderly 
way that doesn't disrupt the operation of the institution and 
things of that sort, just like we do with open meeting stuff, 
that you have to go during hours that are conducive to doing it 
and not walk into the City Council Chambers and say, "Stop, 
everybody, and give me the minutes of the last three meetings." 

So, I really am interested in getting a change of 
direction there. It's like, maybe there's a reason why, at this 
point, you shouldn't look into Corcoran. I don't think there 
was any reason why you weren't the first one out of the box 
looking at Corcoran. 

If the FBI comes in, or somebody else comes in, 
and I'm not saying they were right or wrong, but, you know, the 
paper was, well, there's no problem there. 

Now, there's not only a problem, you've got 
people indicated; you've got the taxpayers picking up the tab, 
and you have things like this going on. 

Maybe if you would have been the first in, you 
might have saved a lot of problems and headed off the Justice 
Department, because we don't need the feds looking at our 


prisons if we can do the job ourselves. 

MR. WOOD: I agree, Senator. 

CHAIRMAN BURTON: I've got a real problem. 

I don't mind this nomination going to do Floor, 
but I think we'd better have whoever it would be, the Agency 
Secretary come in. If this is a policy that they implemented 
that said basically, as I read it, the whole Legislature could 
say, "We want you to look at this, " and the Agency says no, you 
can't look at it. 

MR. WOOD: That's true. 

CHAIRMAN BURTON: That's not what, I don't 
believe, although I don't know if I was here when it was set up, 
but I don't think we had in mind allowing the fox to guard the 
chicken coop. 

SENATOR AYALA: We do have a new appointment to 
that office, the Secretary of the Agency, whom I've met at least 
half a dozen times already, and I think he's very positive. 
He's going to get things done. 

In fact, he's the one that ordered you to go to 
Stockton and investigate. 

MR. WOOD: Yes, sir. 

CHAIRMAN BURTON: But he shouldn't have that 
authority. I mean, you should have, if you're going to do the 
thing, it should be your authority and your judgement. But 
basically, he's got a whole lot of other fish to fry. 

Basically, you've got somebody who could be 
culpable in the problem saying, "Hey, don't look at me." 

SENATOR KNIGHT: All you're asking is, he 


shouldn't have veto power as far as the Secretary is concerned. 
He should have the power to say go investigate something. 


Senator Ayala. 

SENATOR AYALA: My legislation will have the 
Office responding to the Governor and to the Legislature, and 
not to the in-betweens. That will clear that problem up. 

CHAIRMAN BURTON: I don't even mind him 
responding. I don't want the veto. They shouldn't have the 

I guarantee you, before this thing's taken up on 
the Floor, I'm going to want to have a talk with them and see 
whether or not they just put a policy in that says, "a policy 
developed by you and approved by them, " so again, not you. 

The Inspector General develops a policy saying, 
"We will do this, that, and the other thing, but we won't do it 
unless you say okay," and they say, "We'll approve that." 

SENATOR KNIGHT: In the interim, Mr. Chairman, 
could I make a motion that we approve his confirmation? 

CHAIRMAN BURTON: We'll send it to the Floor. 
I'm reserving the right, sure. 

SENATOR KNIGHT: I said in the interim. I'll 
make a motion. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 



Hughes Aye. Senator Knight. 


Knight Aye. Senator Lewis. 



Senator Burton. 



CHAIRMAN BURTON: The roll's held open 
[Thereafter SENATOR LEWIS added 
his Aye vote, making the final 
vote 5-0 for confirmation.] 

[Thereupon this portion of the 

Senate Rules Committee hearing was 

terminated at approximately 3:35 P.M.] 
— ooOoo — 


1, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California/ do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 
day of /^f<^d--^^^ , 1998. 



Additional copies of this publication may be purchased for $3.75 per copy 
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ROOM 113 


MONDAY, MAY 11, 1998 
1:38 P.M. 





ROOM 113 


MONDAY, MAY 11, 1998 
1:38 P.M. 

Reported by 

Evelyn J. Mizak 
Shorthand Reporter 











GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NANCY MICHEL, Consultant on Governor's Appointments 






Board of Behavioral Science Examiners 

SHERRY MEHL, Executive Officer 

Board of Behavioral Science Examiners 


California Regional Water Quality Control Board 

San Diego Region 


Clean Bay Campaign 
Environmental Health Coalition 

DONNA FRYE, Founder 

Surfers Tired of Pollution (STOP) 

THOMAS A. JOAS, M.D., Member 
Medical Board of California 
Division of Licensing 



California Association of Anesthesiologists 


California Medical Association 


California Association of Plastic Surgeons 

FRANK CUNY, Director 
Citizens for Health 


American College of Domicilliary Midwives 


California Association of Midwives 

Davies Medical Center 
San Francisco 

Davies Medical Center 
San Francisco 

St. Luke's Hospital 


Ripon Medical Clinic 

Jackson, California 

Jackson, California 


Pacifica Hospital of the Valley 

Los Angeles 




Proceedings 1 

Governor's Appointees; 


Board of Behavioral Science Examiners 1 

Background and Experience 1 

Questions by SENATOR LEWIS re: 

Controversy over Oral Examinations 1 

Evaluation of Change in Passage Rates 3 

Questions by SENATOR AYALA re: 

Move to Abolish Licensing for 

Clinical Social Workers 4 

Need for Oral Exam for Marriage, 

Family and Child Counselors 4 

Questions by SENATOR HUGHES re: 

Selection of Examiners 5 

Compensation of Examiners 5 

Length of Term for Examiners 5 

Master Examiners 6 

SHERRY MEHL, Executive Officer 

Board of Behavioral Science Examiners 6 

Qualifications for Examiners 7 

Diversity 8 

California Only State to Require 

Oral Exams 9 

Reason Board Has Not Revised Education 

and Training Requirements for Licensure 9 

Status of Continuing Education 

Requirements 11 

Questions by SENATOR KNIGHT re: 

Lack of Male Examiners 12 

Motion to Confirm 12 

Committee Action 13 


Regional Water Quality Control Board 

San Diego Region 13 

Introduction and Support by 


Background and Experience 15 

Questions by SENATOR LEWIS re: 

Problem of Pollution Runoff in 

San Diego and Leading Contributing 

Factors 18 

Most Effective Strategies 18 

Questions by SENATOR ^YALA re: 

Possibility of Conflicts of Interest 

because of Law Firm Affiliations 19 

Companies Cited for Major Violations 

and Amounts of Fines 20 

Proper Balance between Industrial, 
Domestic, Environmental, Fishing and 
Agricultural Uses for Water Supply 20 

Circumstances for Enforcement Action 

against Violations of Discharge 

Requirements 22 

Witnesses in Opposition; 


Clean Bay Campaign 

Environmental Health Coalition 22 

Questions by SENATOR LEWIS re: 

Legal Citations 24 

Resumption of Testimony 24 


Questions by SENATOR AYALA re: 

Concerns about Qualifications 29 

DONNA FRYE, Founder 

Surfers Tired of Pollution (STOP) 30 

Questions by SENATOR AYALA re: 

Qualification of Nominee 3 3 

Response by MS . HUNTER 33 

Rebuttal by MR. MILCH 34 

Questions by SENATOR LEWIS re: 

Name of NGO Organization Associated 

with Recreation, Fish or Wildlife 36 

Impact on Board ' s Vote when Members 

Recuse Themselves 37 

Response by MS . HUNTER 37 

Comments by SENATOR LEWIS re: Selectivity 

of Opposition 39 

Questions by SENATOR HUGHES re: 

Qualifications for Position 41 

Votes Needed on Board to Pass Items 42 

Request by SENATOR HUGHES to Put Confirmation 

Over until Chairman Is Present 43 

Decision to Put Over Confirmation 44 

THOMAS A. JOAS, M.D. , Member 

Medical Board of California 

Division of Licensing 45 

Background and Experience 45 

Questions by SENATOR HUGHES re: 

Trainees Pay to Enter 1324 Programs 49 

No Guarantees for Licensure 49 

Purpose of 1324 Programs 49 


Nominee ' s Training 51 

Accreditation of Community Hospitals 51 

Resumption of Testimony 52 

Questions by SENATOR HUGHES re: 

Passage of Exams by Graduates of 

1324 Program 53 

Resumption of Testimony 53 

Questions by SENATOR AYALA re: 

Reason for Abolishing 1324 Program 55 

Questions by SENATOR LEWIS re: 

Suggestions to Speed up Physician 

Disciplinary Process 57 

Witnesses in Support: 


California Association of Anesthesiologists 58 


California Medical Association 58 


California Society of Plastic Surgeons 59 

FRANK CUNY, Director 

California Citizens for Health 61 


American College of Domicilliary Midwives 61 


California Association of Midwives 62 

Witnesses in Opposition; 


Davies Medical Center 63 

Questions by SENATOR HUGHES re: 

Reason for So Many Patient 

Complaints against Physicians 

Trained in 1324 Programs 70 


Questions by SENATOR KNIGHT re: 

Location of Davies Medical Center 72 

Failure Rate of Other 1324 Trainees 73 

Other 1324 Programs 73 

Questions by SENATOR LEWIS re: 

Graduates from DR. RIDER'S Program 74 

Differences between 1324 Programs 74 

Questions to DR. JOAS by SENATOR LEWIS re: 

Bias against 1324 Programs 75 

Faults Found against DR. RIDER' s Program 75 

Abolishing Entire 1324 Program May 

Have Gone too Far 76 

Questions to DR. RIDER by SENATOR LEWIS re: 

Intention to Oppose Confirmation 

of Future Medical Board Appointees 77 

Resumption of Testimony by DR. RIDER 77 

Questions by SENATOR KNIGHT re: 

Cost Associated with Program 78 

Purpose of Program 79 

Destination of Program Graduates 80 

Resumption of Testimony by DR. RIDER 81 

Further Witnesses in Opposition: 


University of California at San Francisco 83 


St. Luke's Hospital, San Francisco 85 


Ripon Medical Clinic 86 


Questions by SENATOR KNIGHT re: 

Definition of 1324 Program 87 

Preclusions 88 

Further Witnesses in Opposition: 


Jackson, California 88 


Jackson, California 90 


Pacif ica Hospital of the Valley 90 

Motion to Confirm 91 

Committee Action 92 

Termination of Proceedings 92 

Certificate of Reporter 93 

m — ooOoo-- 

SENATOR LEWIS: We're now beginning the 
Governor's appointees appearing today. First up is Marsena 
Buck, Member, Board of Behavioral Science Examiners. 

MS. BUCK: Good afternoon. 

SENATOR LEWIS: Good afternoon, welcome. 

Do you have any kind of opening statement you'd 
like to share with us today? 

MS. BUCK: My name is Marsena Buck. I'm a Member 
of the Board of Behavioral Science. I have served in that 
capacity for almost four years. 

I find that Board to be one that is greatly 
concerned about the welfare of the consumers in California who 
come to the professions that are licensed and regulated by the 
that Board, and it's been a pleasure to serve on it. 

I would be pleased to answer any questions you 
have for me. 

SENATOR LEWIS: Thank you. 

The question that I would like to ask is what's 
going on with the controversy relative to oral examinations? 

MS. BUCK: Yes. 

SENATOR LEWIS: And your position on the whole 
issue, given the fact that I think California is the only state 
that does require the oral component. 

MS. BUCK: Certainly. 

Over the course of the last few months, there has 
been a great deal of focus on the oral examine for particularly 

licensed clinical social workers. I am a licensed clinical 
social worker. 

We -- as you know, in the Department of Consumer 
Affairs there are several exams that include orals: the 
marriage, family counselors; psychologists. The concern, and 
it's one the Board takes very seriously, is whether the oral 
exam is fair and equitable, and whether, in having an oral exam 
for not just this profession but any profession, the people of 
California are better protected and better served. 

We have at the Board level, and you have in the 
Legislature, over these past months looked very carefully at 
that. Several things have happened as a result of that. We 
have a new scoring system for both of our orals. It's been 
used now for the marriage, family, child counselors, and will be 
used for this round of the LCSW. 

There is — we're planning a new written exam. 
The exam is both; there's an oral and a written. We have set 
aside more time for the candidates to consider the vignette. 

This oral, by the way, is designed to test those 
things that you don't normally — you cannot well test with a 
written exam. Social work and marriage, family counseling, 
psychology by it's very nature, is an oral profession. We work 
with people individually and in groups. And we use the skills, 
those skills, to bring to resolution the problems presented to 
us, some very serious. We muck around in people's heads a lot. 

And one of the best ways, in my opinion, to get 
to that kind of knowledge is through an oral exam that has a 
vignette, that's standardized for everybody, that's well 

designed, and that gives candidates a chance to say to examiners 
what they really know about people, and about intervening in the 
lives of people in some very, very serious and grave ways. 

This exam -- I can't — I don't think I can 
convey to you how seriously the Board takes this whole issue of 
examination because of the seriousness of the professions that 
we are involved with on behalf of the consumers of California. 

We have looked at the panel of examiners, at how 
they're selected, at how they're trained. The test has been 
validated both for content and for the presentation. 

It's a very serious subject for us. 

SENATOR LEWIS: Have there been any modifications 
to the test in place long enough so that you've been able to 
evaluate any kind of a change in passage? 

MS. BUCK: Not really, because they're mostly in 
place. I mean, they're in place, awaiting results. 

We have — we've done a series of studies. The 
time, for example, on the vignette, giving people a longer 
period of time to look at and decide the approach they're going 
to use is a recently made change. It's very hard for me to tell 
you at this point what impact that's going to have. 

We have studies in place and in route that will 
give us all a good deal of better information about that, but 
the truth of the matter is, they are in process. 

We're looking at this from several points of 
view, by the way. We're, as are you, interested in the 
education. We're also interested in the supervision the 
candidates have prior to taking an exam. 

SENATOR LEWIS: Thank you. 

Before we ask for anyone from the audience 
whether there was anyone that wishes to testify in favor or 
against the confirmation, are there any questions from either 
Senator Ayala or Senator Hughes? 

SENATOR AYALA: Yes, I have a question. 

SENATOR LEWIS: Senator Ayala. 

SENATOR AYALA: Is there a move afoot to abolish 
the licensing for clinical social workers? 

MS. BUCK: To abolish the licensing? I don't 
know of any attempt to do that. 

SENATOR AYTILA: There is none, but you're talking 
about the oral exam only. 

MS. BUCK: The major focus has been on the oral 
exam. From the Board's point of view — 

SENATOR AYALA: It also applies to marriage, 
family, and child counselors as well? 

MS. BUCK: No, the oral exam for marriage and 
child counselors has not been looked at in terms of elimination. 

SENATOR AYALA: Of course my next question is, 
why not? 

MS. BUCK: You know, I don't know. It seems to 
me that if you're going to declare that we don't need an oral 
exam for one of these helping professions, then you should 
really look at eliminating them for all of them. 

And it's really a consumer issue, I think. 

SENATOR AYALA: Thank you. 

SENATOR LEWIS: Senator Hughes. 

SENATOR HUGHES: Thank you very much. 

How is a panel of examiners selected? Would you 
make us aware of that, please? 

MS. BUCK: Certainly, Senator Hughes. 

We advertise for panel members, for examiners. 
We do that in a number of ways. For example, there was a Senate 
hearing last year in which a number of people expressed some 
concern about the oral exam. In the next recruitment of 
examiners, which took place shortly after that, we contacted all 
of those people to see if any of them would be interested in 
being examiners. 

We advertise in the professional journals. We 
advertise in our own newsletter. We do contact through the 
schools and generally widely within the professional community. 

Those people are then — 

SENATOR HUGHES: Are they compensated for their 
services in any way? 

MS. BUCK: They are compensated, and I can't tell 
you the amount that they're compensated. I just don't 

We strive to select people who have professional 
expertise. We strive to be sure the selection represents the 
demographics of California in terms of the people of color, and 
the whole range of expertise we look for in the examination. 

SENATOR HUGHES: How long do these people serve 
as examiners? For a one-time shot for one time examining 
period, or over a year, two years, months, or what have you? Or 
does it depend on whether the Board is pleased or not with their 

performance? Could you tell me that? 

MS. BUCK: We do have a process of -- we have 
master examiners. We have people who are at a higher level of 

SENATOR HUGHES: How do you become a master 
examiner? Over a period of time, or -- 

MS. BUCK: Over a period of time with experience 
and with demonstrated expertise. 

SENATOR HUGHES: What's the criteria for becoming 
a master examiner? That's what I'm really aiming at. 

MS. BUCK: And I honestly don't have the details 
of that for you, I'm sorry. I'll be happy to get them for you. 

SENATOR HUGHES: I think it help our Committee a 
great deal, I mean just to even have it on record, so that as we 
look at this, and look at — someone behind you coming up to 
answer that question? 

MS. BUCK: No doubt. This is Sherry Mehl, who's 
the Executive Officer of the Board. 

MS. MEHL: I'm the Executive Officer of the 

We currently have master examiners or lead 
exciminers. There are two for the north and two for the south. 
We give the exam simultaneously in both regions. 

These are people that are people that have served 
as examiners for a long period of time. 

SENATOR HUGHES: What do you call as a long 
period of time? 

MS. MEHL: Most of them between six and ten years 

as examiners. They are familiar with all of the issues of the 
examination, and they're oversight at the exam, so that they 
will sit in. If there is a problem with one of the examiners, 
they may sit in on the examination to review what's going on. 

They will review tapes if there is any wide 
discrepancy. That is immediately reviewed on site. 

There are two independent examiners who review 
each candidate, so they are rating independently of each other. 
There are some times when there is a discrepancy between the 
two scores for each examiner. So, that is reviewed by the lead 
examiner on site to determine why that happened, and so they can 
resolve that immediately at the site. 

SENATOR HUGHES: What are their individual 
qualifications to qualify as an examiner, other than the length 
of time they spent on task? What are their preparations? 

MS. MEHL: They receive a personal interview 
where they are asked what they're doing to be current in the 
profession. They have to have a current caseload so that they 
are actually active in the profession. They also have to 
demonstrate their ability, through testing, where we actually 
test them on how they can — if they can actually do the 
examination themselves. And then we also — on personal 
recommendations as well as their resumes. 

SENATOR HUGHES: The choice of these examiners, 
do they include anything about gender, or age, or et cetera, 
ethnicity or race? Or are you at all concerned about those 

MS. MEHL: We strive for the most diverse 


population of examiners that we can possibly obtain. 

SENATOR HUGHES: You said you had master 
examiners for north and south. Would you describe them in terms 
of the categories that I named, please? 

MS. MEHL: Yes. 

In the north there are two female lead 
examiners. One is an Afro-American; the other is Caucasian. 

Is this the kind of information that you want? 


MS. MEHL: They are about forty-five to fifty 
years old. 

In the south there are also two examiners. One 
is an Afro-American; the other is Caucasian, and they have 
been -- they are both around the same ages, between forty-five 
and fifty-five, I believe. 

SENATOR HUGHES: They're not both females, are 

MS. MEHL: They are both females. 

SENATOR HUGHES: So, you don't have any male 
examiners? That's what I'm driving at. 

MS. MEHL: We currently have an examiner slot 
that is open, and we are adding an examiner from the north who 
is a male and Asian. 

SENATOR HUGHES: Thank you, because I'm an equal 
opportunity employer, and I was really a bit surprised to find 
out that you didn't have any male examiners. 

SENATOR LEWIS: Were you pleasantly surprised. 


SENATOR KNIGHT: Thank you for taking up our 
issue. • 

SENATOR HUGHES: I like males. Put it on the 
record, please. 

[Laughter. ] 

SENATOR HUGHES: I am glad that you have that 
information available. 

MS. BUCK: I'm glad that she was here. And she 
said exactly what I would have said had I known. 

SENATOR HUGHES: Had you known the answers. 

Why is our state the only state to require an 
oral exam as the condition of licensure? 

MS. BUCK: I'm not sure I can answer that because 
I don't know what goes on in all the other states. 

I do — I have, over last two years, represented 
California at the American Association of State Social Work 
Boards. And in talking, in casual talk to colleagues, it's my 
impression that other states are interested in oral exams 
because they give you a different look at what a person can do 
in this particular profession. 

But I honestly am not an expert in what other 
states do. 

SENATOR HUGHES: Why hasn't the Board revised the 
education and training requirements for licensure to ensure that 
the applicants have the clinical skills that are currently 
tested for in the oral exams? 

MS. BUCK: Well, as I understand it, the Board 
doesn't have jurisdiction over what schools teach, but the bill 


that's moving forward at this point would remedy that, and I 
think appropriately so. 

My sense of that is that within -- as this 
license, both the licensed clinical social worker and the 
marriage, family, counselor license has evolved — and I have a 
very low license number, so I've watched the evolution of this. 
I've seen all the forms that this exam has been in over the 
period of my career -- my sense is that the Board — the state 
has always looked for the clinical emphasis. And that frankly, 
the issues have been in terms of what happened in terms of 
people's preparation, knowing really how — let me back up. 

This license is a license to do psychotherapy. 
Everybody who comes out of the school of social work isn't 
prepared to do psychotherapy, shouldn't be. All social workers 
don ' t . 

But in the fullness of time, there has been a 
sense that you needed a license, whatever you did. So, I think 
there's been some need, not at the state level, and not at the 
Board level, but within the professional coinmunity to force 
fit. And I don't think that ever works. 

My sense is that the language that's moving 
forward now in the Senate bill would do a lot to mitigate that. 
And that frankly, sunset reviews do a great deal to make us look 
very closely at these issues. 

I think it's something you need to kind of mend 
the fence and walk the fence line on rather regularly. 

SENATOR HUGHES: I thank you very much for being 
patient with my probing, because I was really curious about 



And maybe you could tell me what's the status of 
the Board's implementation for extended continuing education 
requirements for marriage and family, child counseling, and also 
for the licensed clinical social workers? 

MS. BUCK: We have implemented the continuing 
education requirements, and people are now accumulating those 
hours, including me. 

You know, it's an interesting experience, because 
I have to tell you from my point of view, that my life gets 
fairly busy. And without. some kind of requirement that I go out 
and do this, I didn't always. I have to have 36 hours before I 
can renew my license next time around. 

You know, as I move around the state, people are 
very seriously focused on the continuing education. I very much 
think we have to do that in professions, by the way. 

SENATOR HUGHES: Well, we try to renew our 
licenses every time we come up for re-election. 

MS . BUCK : I know you do . 

SENATOR HUGHES: I hope that the education we 
receive here is good and not bad. 

Thank you very much. 

MS. BUCK: My only regret about your renewing 
your licenses, each and every one of you, is that we've put a 
limit on the number of times you can do that. 

SENATOR HUGHES: That's true. 

SENATOR LEWIS: Anyone in the audience wishing to 
offer testimony on behalf of the confirmation? Anyone wishing 


to come forward in opposition or to share concerns? 


I'm sorry I was late. Maybe I came in after the 
discussion and the questions were answered. 

Good afternoon. 

MS. BUCK: Good afternoon. Senator. 

SENATOR KNIGHT: It was indicated that there were 
no males on the Board. 

MS. BUCK: As examiners. 

SENATOR KNIGHT: As examiners? 

MS. BUCK: As lead examiners, yes. 

SENATOR KNIGHT: So, these aren't lead examiners? 

MS. BUCK: We do have some men on the Board, 
actually, several. 


MS. BUCK: The problem that Senator Hughes was 
talking about is, of the current four lead examiners, all four 
are women. We are adding a fifth man to that position. 

SENATOR KNIGHT: I hope it's not a fifth wheel. 
Okay, thank you. 

MS. BUCK: Senator, a man would never be a fifth 

SENATOR LEWIS: What's the pleasure of the 


SENATOR LEWIS: We have a motion by Senator 
Knight. Please call the roll. 

SECRETARY WEBB: Senator Ayala. 




SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Four to zero. 

SENATOR LEWIS: Congratulations. 

MS. BUCK: Thank you very much. 

SENATOR LEWIS: We are going to proceed to Item C 
in our agenda so we can accommodate Assemblywoman Davis, go 
forward with Mr. James Milch, Member of the California Regional 
Water Quality Control Board, San Diego Region. 

Welcome, Assemblywoman. 

ASSEMBLYWOMAN DAVIS: Thank you, Mr. Chairman and 
Members. I certainly appreciate the opportunity to introduce my 
good friend here today, and having not done this before, before 
the Committee, if I'm doing something Inappropriate, please let 
me know. 

I really am here for a very personal reason. I'm 
here to spoke on behalf of Mr. James Milch, who is a candidate 
for appointment to the San Diego Regional Quality Control Board. 
He has been a neighbor and a dear friend of mine for the past 25 
years. It is probably rare for me to come and speak on behalf 
of a Governor's appointee, but it really is my honor to do that 


From the first time that Mr. Milch and I met many 
years ago, actually on the corner of our neighborhood, a very 
nice corner in San Diego, it was clear to me that I was meeting 
a special individual. TUid over the subsequent years, I've come 
to appreciate his professional and his community involvement. 
The early of private impressions that I had have certainly been 
borne out . 

Where ever he put his energies, there was a sense 
that he wanted to make a positive contribution. And I know that 
most people who are living in San Diego and have had an 
association with him over the years really respect the role that 
he has played in the development of the city, and the way in 
which he contributes many of his own personal hours to just 
about anything that he has come in contact with. 

And I believe that his reputation for honest 
appraisal and his tireless efforts and even-handedness have been 
appreciated by many. I can even attest to his even-handedness 
because he's had to take some ribbing for his support of my 
candidacy over the years, and I always knew that I could go to 
Jimmy, and that he would be very honest and up- front with me, 
and has been very forthright in giving me his guidance and 

His legal career has been marked by one of 
impeccable integrity, and his community efforts have been 
unselfish. He was Chairman of the Park and Recreation Board for 
many years, and is an active member and leader of the Old Globe 
Theater in San Diego. He also almost single-handedly led a 
drive to move the historic First Synagogue in San Diego to a new 


home in Heritage Park in Old Town. 

I served with Mr. Milch for about eighteen months 
on the City of San Diego's Growth Management Task Force 
in the mid-80s. That was a time that we were experiencing 
tremendous growth in San Diego. And then, the ensuing years, as 
you all know, we saw a recession, so that the work of that task 
force didn't necessarily come to fruition in the way that it was 
intended. But during that time, he was a moderating force on 
that group and always a problem solver. 

You really could not pigeon-hole his approach, 
despite the fact he does represent a number of land developers 

I know that you have had a number of letters in 
support of Mr. Milch, and that he has been serving on that 
Control Board since last July. And I would hope that you would 
look favorably on this appointment, and that he would have the 
opportunity to give his contribution in the ensuing years, and 
that he would be a strong member of that Board. 

We certainly need people of integrity and clear 
thinkers when they are looking at these issues, and I cannot say 
anything stronger, that I think you have excellent candidate in 
front of you. 

Thank you very much. Members, Senators, for 
hearing me out, and I hope that it is a good opportunity for you 
all to chat with Mr. Milch. Thank you. 

SENATOR LEWIS: Thank you for joining us today. 

Mr. Milch, welcome. 

MR. MILCH: After an introduction like that. 


there is very little I can say, other than to thank the 
Assemblyperson very much for that chronicle of events. 

I do want to serve the community on the Regional 
Water Quality Control Board. I confess that I came to the 
position without expertise in that field, but have attempted to 
be a quick learn in the months that I have served since July of 
last year. 

Two issues have been addressed by members of the 
public. I've attempted to respond to those issues of concern in 
a letter that I sent to the Chairman, but I think copies were 
directed to each of the other Members. 

The first related to a conflict of interest. 
That one most recent letter relates to the fact that I represent 
Sea World, which is a subsidiary of Anheuser Busch Company. Sea 
World is a permanent holder. 

No issue has ever come before the Board during my 
tenure dealing with Sea World, but it is clear, and I have been 
advised by Mr. Atwater early on that I cannot participate in any 
hearing dealing with a client that has a permit. When that 
issue ever comes before our Board, I would clearly remove myself 
from the chambers during any of that deliberation. 

The other conflict that I think the Environmental 
Health Coalition addressed in their letter relates to a 
relationship that my law firm has with another law firm. 

Our firm is of counsel to a San Diego law firm. 
That other law firm has occasion to represent people with 
matters before the Board. 

I have no economic interest in that law firm. As 


some of you might know, of counsel relationships are as varied 
in interpretations as there are such relationships. 

Basically, my law firm is a two-person law firm. 
It specializes in legislative advocacy, municipal work, and we 
have really no occasion to do any kind of drafting or 

We were — it was suggested that we associate in 
a forum with another law firm so that we might refer cases that 
we don't handle to them, and that they could refer cases falling 
within our jurisdiction to us. 

We have, as I pointed out in my letter, an 
economic arrangement that on those cases there would be a fee 
paid either to ourselves or to themselves. 

However, it is clear that I would not again sit 
on the Board on any matter that we would have referred to this 
other law firm where they were representing those people. 

An issue came up as to the Port of San Diego 
being represented by this other law firm. And I identified all 
of these factors to the Board attorney, and he concurred that I 
had no conflict of interest and could participate. So, that 
touches on the issues of conflict. 

I, in my conscience and, I think, legally, have 
no conflict in those matters. 

The other issue related to whether I filled the 
distinctive category of fish, wildlife and recreation that was 
related to this particular slot. 

Again, as Assemblyperson Davis has indicated, my 
public career has pretty well spanned most of these areas of 


parks, recreation. I fish. I swim. I don't hunt. I don't 
hike. But I think for the most part, I cover what is envisioned 
within that classification. 

And I'd certainly be happy to answer your 
questions as best I can. 

SENATOR LEWIS: Thank you, Mr. Milch. 

How big a problem do you think pollution runoff 
is in San Diego, and what are the leading contributing 

MR. MILCH: Well, pollution runoff, nonpoint 
runoff, is the major cause of our bays and ocean being 
polluted. It is a big problem, and unfortunately, I don't see 
it as a problem that is going to be easily solved because, if we 
have two million citizens in our community, we have two million 
contributors. They don't know it, but the nonpoint is a 

We and the County, as I pointed out in my 
correspondence, are being pro-active in trying to monitor not on 
a reactive basis, but in anticipation of what the pollution 
content is in many of our waters, and try to address the 
locations and attack them as best we can. 

But it is a serious problem in our region. 

SENATOR LEWIS: From your experience, what are 
most cost effective strategies of trying to combat this kind of 
pollution? Is there anything else that's under discussion right 

MR. MILCH: I think education is the most cost 
effective. We have to make each of our citizens aware and 


responsible for what is happening, and what they're doing on 
their lawns, what they're doing on their streets, with their 

We seem to have a pretty good control over point 
pollution. In other words, if the Navy, something flows from 
one of their ships, we capture it and, we can hit them a couple 
of times and get it to stop. 

But we have to educate the public of their role. 

SENATOR LEWIS: Questions from Members of the 
Committee? Senator Ayala. 

SENATOR AYALA: Mr. Milch, you're a member of the 
law office of Milch and Wolfsheimer? 

MR. MILCH: Yes, sir. 

SENATOR AYALA: Do they ever appear before the 
governing board on an issue — 

MR. MILCH: Never. 

SENATOR AYALA: They never have. 

I have a letter here from that office to the 
members of the Board, the California Regional Water Control 
Board, regarding a shipyard general permits, number so-and-so. 

MR. MILCH: From our office, sir? 

SENATOR AYALA: You're listed as one of the 
firms, but it's Procopio, Cory, Hargreaves and Savitch. 

MR. MILCH: Yes, that is the firm of which we are 
of counsel. I sort of explained — that's sort of an economic 

SENATOR AYALA: You're not in any way connected 
with the firm itself? 


MR. MILCH: Other than of counsel, we do not 
participate in the profits of that firm or share in their losses 
either, sir. 

SENATOR AYALA: Can you give me names of 
companies that you have ordered to cite for major violations, 
and also the amounts that have fined, offhand? 

MR. MILCH: Probably the most recent citation was 
the Port of San Diego for about $132,000. 

We have had litigation down in the Chula Vista 
area with polluters there. I can't tell you the name of the 
companies. And we also have ongoing litigation and orders 
outstanding with the Chatham Brothers scrap yard up in 

As I pointed out in one of my correspondence, a 
great many — you know, like 95, 98 percent — of the pollution 
issues, the citations, the orders, are issued and resolved at 
the administrative level. We get very few. In fact, I think 
it's been about two or three since I've been on the Board in 
July of last year. So, there hasn't been a heavy, you know, 
court of last resort where we're sending out fines. 

The one that is most memorable is the one with 
the Port of San Diego. 

SENATOR AYALA: What do you consider a proper 
balance between industrial, domestic, environmental, fishing 
and agricultural uses for our actually limited water supply, 
especially in San Diego, where you don't have an underground 
basin? What do you consider a proper balance between all of 
these concerns? 


MR. MILCH: I think the — everybody thrives on 
as clean a water as you possibly can get. I don't think there 
is an excuse, because you have an industry, that may be even 
creating a lot of good jobs. If that industry is adversely and 
grossly affecting our waters, you're not balancing, because the 
end result is usable and pure waters, as pure as we can get it. 

SENATOR AYALA: But there should be a balance 
between all of these needs that you have for water resources. 

MR. MILCH: Oh, sure. You can't say no boats in 
the water because there's swimmers, but you do have to require 
permits and procedures to balance the uses. 

San Diego is trying like heck to be an active 
port, a shipping source, and so we don't want to run that 
business out, but we don't give anyone carte blanche to pollute 
the water. 

But I think under our permits, we have things 
pretty well controlled. But as asked earlier, I think it's our 
runoff, non site-specific, that we have our problems. 

SENATOR AYALA: San Diego depends mostly on 
imported water, as you well know. There's no underground basins 
in San Diego. 

MR. MILCH: Correct. 

SENATOR AYALA: So, the amount of water you get 
is mostly State Water Project. You're trying to get some from 
the river now, but that's another issues that we don't want to 
get involved with here today. 

Under what circumstances would you bring an 
enforcement action against violations of discharge 


requirements? Is there any? Do you have reservations against 
going after these people that violate that? 

MR. MILCH: None at all. That's the job. 

SENATOR AYALA: I don't have any other questions, 
Mr. Chairman, at this time. 

SENATOR LEWIS: Thank you. Senator. 

Any other questions from Members of the 

Anyone in the audience wishing to offer 
additional testimony in behalf of the confirmation? Anyone 
wishing to offer testimony in opposition or sharing concerns 
regarding the appointment? Please come forward. 

MS. HUNTER: Good afternoon. Senators. My name 
is Laura Hunter from the Environmental Health Coalition, where 
I am Director of the Clean Bay Campaign. 

I am here before you today to oppose the 
confirmation of Mr. Milch to the San Diego Regional Water 
Quality Control Board. 

For those of you that aren't familiar with the 
Environmental Health Coalition, we are a local, San Diego based, 
nonprofit environmental justice organization dedicated to 
preventing the illness and environmental degredation associated 
with the toxic chemicals in the environment, work place, and 
home . 

Since 1987, we have been heavily involved in the 
activities of the Regional Water Board in trying to clean up, 
protect, San Diego Bay, particularly in the area around safety 
of fish consumption for our urban communities that depend on the 



Bay, and the contaminated sediment problems which we have. 

Our objections to Mr. Milch as a Board member are 
founded in the fact that we do not believe that he meets the 
minimum requirements outlined in the Water Code. I'll talk to 
that in a minute. I gave you the first page of that. 

He does not have a demonstrated interest in the 
sensitive uses of the waters which he is to represent and has, 
in our view, a conflict of interest. 

I want to next thank this Committee, because it 
was the Senate Rules Committee that, just about a year or a 
year-and-a-half ago -- and Mr. Ayala, I think you remember this, 
and we want to reaffirm our thanks to you — you did deny the 
confirmation of two Water Board members to our San Diego region. 
That has made a demonstrable positive impact on the kind of 
dialogue and activities that we've had in San Diego. 

I just want you to know that what you folks do up 
here affects us down there, and we are here again today to ask 
for your help. 

Mr. Milch does not meet the one requirement, in 
our view, for the position which he occupies. You will see on 
the page before you from the Water Code. It states the position 
filled by Mr. Milch is to be filled by, quote, "One person from 
a responsible nongovernmental organization associated with 
recreation, fish, or wildlife." 

We do appreciate Mr. Milch 's activities with the 
Old Globe Theater, Balboa Park, those kinds of recreational 
areas, but they are not water dependent. They are not public 
health kinds of activities. That's not what was meant by the 


recreation in the Water Code. He just does not meet this 
criteria . 

In his March 20th letter, he indicated that he is 
a member of the Friends of Balboa Park, but there is no water 
dependent recreation in Balboa Park, unless you count the 
reflecting pond, which I don't think we do. The wildlife are 
just the pigeons that were imported for the World's Fair. 

This is not the kind of recreation that was meant 
in the Water Code. It meant fishing, swimming, diving, that 
kind of thing. 

We have great concern about the safety — 

SENATOR LEWIS: Do you have any legal citation on 
that point? Any legal citation on that last point? 

MS. HUNTER: The Water Code. 

SENATOR LEWIS: Relative to what you're saying 
about what recreation refers to? 

MS. HUNTER: No, I don't. But I guess ~ 

SENATOR LEWIS: Just because it's in the Water 
Code — 

MS. HUNTER: I think of the Water Code, which is 
about water and talks about water recreation, maybe I'm making 
an assumption that's too big, but the point is, that is the only 
seat where water contact, water recreation, is mentioned. It's 
the only seat, if you look at all the seats where public health 
is the issue. 

I think part of the way we use water for fish, 
wildlife, or swimming, diving, surfing, those kinds of water 
contact situations, so we think that it is not meant to mean 



baseball. We don't have people on the Water Board to protect 
the rights of people who play soccer. 

Not that we don't like soccer, but it's not a 
water quality issue. 

Mr. Milch 's voting record has not defended fish 
and wildlife in the recreation, and his debate at Board meetings 
has, unfortunately, been decidedly polluter-friendly. I want to 
revisit a couple of the votes that Mr. Milch raised in his 

While he indicated today and in his letter, he 
did ultimately vote to fine the Port District $132,000, however 
I was at the hearing, and he only voted that way after he argued 
very clearly and stated that — and I'm quoting, "The Port 
District's efforts were superhuman to achieve the cleanup of 
that site." 

They were not superhuman, and I've included a 
timeline of how many times basically the Port had come to the 
Board and said, "Just don't fine us. We'll take care of it. 
Please leave us alone." The Board would back away, and the Port 
never cleaned up the site. 

Yes, once he figured out there was no other 
support on the Water Board to not give this fine, he did vote 
with the majority. But he argued in debate that we should hold 
off on the fine of the Port yet once again. 

Even though his law firm is of counsel, there is 
a relationship there. He's on the Port District's letterhead. 

We asked Mr. Milch to recuse himself, and he 


Another vote I'd like to talk about, which I 
think you don't have whole story in your letter from Mr. Milch 
on May 20th, is the vote on the San Onofre nuclear generating 
station. They had requested for higher heat discharges into the 
ocean, which is damaging to the ocean. 

There were actually two votes, and I've given you 
the minutes in the packet that I just handed out. One was to 
approve the environmental documentation. The second was to 
approve the actual discharge of the waste. 

It is true, he first voted that the environmental 
documentation was insufficient, and he lost on that count. 
However, he then went on to support the increase in heat. 

The obvious question is, how could he vote for an 
action that would negatively affect ocean waters that he 
believed did not have adequate environmental review? What was 
his support for more water quality degredation based on? 

He has demonstrated a partiality to polluters, 
and his voting record to date demonstrates that he is not a 
suitable representative for public health. 

We've touched on the idea of the appearance of 
conflict of interest. By being in counsel with a firm that 
represents the Port District, there is at least the appearance 
of conflict. 

Even though we understand that the attorneys 
think he satisfied the strict legal requirements, the appearance 
of this conflict, his name on the letterhead of the discharger's 
attorneys, and coupled with his lack of qualification from a 
responsible NGO associated with fish, wildlife, and recreation. 


and record thus far convince us that he should not be appointed 
to this seat. •• 

The past actions of the Senate Rules Committee 
have resulted a determinative improvement in the quality of the 
enforcement and the decisions in San Diego. Several of you may 
not be familiar with the history of the San Diego Regional Water 
Board. The poor enforcement of the San Diego Board was reknown 
and was not abated until this body took very serious and much 
warranted action to deny appointments, confirmation of two 

As a result/ the presence of new, independent 
thinkers and people who vote their conscience on our Board, like 
Charley Wolk, Wayne Baglin, Frank Piersall, Frank Adjarian, have 
made a tremendous difference in the debate and the quality of 
the decisions on our Board. 

You may be surprised to hear that. Although we 
don't agree with those gentlemen on every point, we support that 
they do represent industrial, agricultural, municipal government 
representatives on our Board. They have proven to think 
critically, independently, keeping their expertise in mind has 
resulted in better decisions for San Diego water quality than 
we've ever had before. 

This is why, frankly, we are concerned about 
Mr. Milch. He does not represent the most sensitive uses of 
fish, wildlife, and swimmers of the sea. Listen again to his 
statement from his letter to you, quote: "California's major 
water quality issue is having an adequate supply of good water 
for our state's residential, agricultural and industrial needs," 


end quote. 

No mention of the safety of eating the fish. No 
mention of the water quality that our tourism is dependent on. 

The state program to protect water is dependent 
on the Governor appointing a balance of interests. If Mr. Milch 
was here occupying the water quality chair, the agriculture 
chair/ or the industrial position, we might not be here today. 

However, he does not. He's occupying the chair 
responsible for public and environmental health, and the 
sensitive uses of surface waters. 

We're here today to ask you not to undo the good 
work of the past Rules Committee. 

In conclusion, Mr. Milch is not qualified to 
represent and defend San Diego water quality for use by 
fishermen, wildlife, or water contact recreational users. The 
bottom line is, there's specific Water Code regulation regarding 
the qualifications for a person who occupies this position. 

He has not, certainly to our satisfaction, 
demonstrated that he represents an NGO, associated with or 
expertise in fish, wildlife or water contact recreation. His 
comments and voting thus far do little to assure us. 

An attorney who represents Bay polluters directly 
or in counsel is not an acceptable representative for the most 
sensitive uses of coastal waters. 

Please do not turn back the clock for San Diego 
water quality. Please oppose his confirmation to the fish, 
wildlife and recreation chair. 

Thank you for your time. 


SENATOR LEWIS: Thank you. Any questions for 
this witness? • 

SENATOR AYALA: You have concerns that he 
doesn't qualify for the category -- 


SENATOR AYALA: — of one person from a 
responsible nongovernmental organization associated with 
recreation, fish, or wildlife? 

MS. HUNTER: Right. 

SENATOR AYALA: He's counsel to Sea World. That 
doesn't come under recreation? 

MS. HUNTER: No, sir. That's on the wrong side 
of the issue, I think. I think that's on the wrong side of the 

SENATOR AYALA: Straighten me out. 

MS. FRYE: I think my testimony might answer that 
question for you. 

SENATOR AYALA: I'm sorry? 

MS. FRYE: I think the testimony I'm about to 
give might clarify that. 

SENATOR AYALA: If you want to straighten me out, 

MS. FRYE: Well, not straighten you out, but it 
might answer your question, sir. Straighten out the question; 
not you. 


MS. HUNTER: If she doesn't, then I'll respond 
when I come back. 


MS. FRYE: My name is Donna Frye, and I am the 
founder of Surfers Tired of Pollution. 

I am also the co-owner of Skip Frye Surf Boards. 
In fact/ I closed my business today to attend this hearing. 

My involvement in water quality issues came about 
as a result of the frequent and numerous complaints I was 
hearing from members of the surfing community regarding 
ocean-related illnesses. 

As a business owner who depends on clean water to 
make a living, clean water is my bottom line. I am here to 
testify in opposition to the appointment of Mr. James Milch to 
the San Diego Regional Water Quality Control Board. 

There is number of questions that I asked myself 
before doing this. The first question I asked was, does 
Mr. Milch meet requirements for this position as set forth in 
the Water Code? 

It does not appear to me that Mr. Milch meet the 
requirements or has expertise necessary to represent the 
interests of fish, wildlife, or recreation as required in the 
Water Code. The Water Code states that this person shall be 
from a responsible nongovernmental organization associated with 
recreation, fish, or wildlife. 

It is unclear exactly which NGO Mr. Milch is 
currently associated with that represents any water dependent 
activity, not to mention fish or wildlife. The mere fact that 
he is a cash contributor to the nonprofit Friends of the Park 
does not appear to meet the basic criteria set forth in the 
Code, nor does it meet the spirit or the intent of the Code. 


While it is indeed praiseworthy that Mr. Milch 
also donates money to the Old Globe Theater and the San Diego 
ZoO/ his charitable contributions should not be considered as a 
qualification for this position. 

The second question I wondered was, would this 
appointment ensure a reasonable balance of interests on our 
Regional Board? It also seems that the intent of the Water Code 
ensure that a reasonable balance is struck on the Board so that 
all interests are adequately represented. This position 
requires that the selected candidate represent recreation, fish, 
or wildlife, not interests of corporate clients whose positions 
are frequently at odds with the protection and preservation of 
our coastal resources. 

Does Mr. Milch 's letter to the Senate Rules 
Committee accurately represent his voting record? We are also 
concerned about some of the comments made in Mr. Milch' s letter 
to the Committee, as also stated by Laura Hunter with EHC. Of 
particular concern is his representation of the vote he made 
regarding Southern California Edison's request to increase the 
temperature of its discharge water. 

I was at that hearing on an unrelated matter, and 
I do know he voted to approve the increase . 

We are also concerned about his future conflict 
of interests. Is it reasonable to expect that the Board member 
representing recreation, fish or wildlife be able to vote on 
decisions affecting Mission Bay Park, one of the largest aquatic 
parks in San Diego, as it relates to Sea World? 

Last Wednesday, I had opportunity to observe and 


speak with Mr. Milch at a San Diego City Council committee 
meeting. The meeting was in regard to the proposed 16.5 acre 
expansion of Sea World into public parkland. Mr. Milch was 
there for Sea World. I was there for Surfers Tired of Pollution 
to speak about the fact that Sea World is treating only 14 
percent of the polluted runoff from the exiting Sea World 
parking facility. The remaining 86 percent is being discharged 
with little, if any, treatment, all at taxpayer expense. 

I was also concerned about the fact that Sea 
World representatives such as Mr. Milch would not identify what 
they planned to build if the expansion into our diminishing 
public parkland was approved. Plus, there is great concern in 
San Diego about Sea World's attempt to receive a blanket 
exemption for their existing 150-acre leasehold, as well as the 
proposed expansion from the 30-foot height limitation in the 
coastal zone. 

Again, Sea World's representatives would not 
identify a specific proposal, citing that the information was 

These issues will come before the Regional Board, 
since Sea World's expansion plans would require at minimum an 
modification to their NPDES permits. 

Clearly, Mr. Milch has a conflict of interest as 
it relates to Sea World. Who will be there to represent 
recreation, fish, or wildlife if Mr. Milch excuses himself from 

STOP respectfully requests that this Committee 
oppose the confirmation of Mr. Milch. 


Thank you for your time and consideration, and I 
hope that answered some of your questions. 

SENATOR LEWIS: Senator Ayala. 


You're suggesting that Item Six, again in the 
Water Code, 13206, read that member should be a voting member of 
an organization associated with recreation, fish, and wildlife? 
A voting member of the organization? 

MS. FRYE: What I am suggesting is that it be a 
representative. That would be someone that would actually be 
speaking for that Board, that actually represents an activity or 
an organization related to recreation, fish or wildlife. 

I think as Laura Hunter pointed out, that isn't 
the case. 

SENATOR AYALA: I'm not trying to defend him, but 
seems to me that if he's of counsel, and you are the general 
counsel, or something, of Sea World? 

MR. MILCH: Yes. But I would not use Sea World 
as my credential of being involved with recreation and 

SENATOR AYALA: You'll speak to that later. 

MR. MILCH: Yes, sir. 

MS. HUNTER: Mr. Ayala, could I say one more 
minute on that? 

I think it's just important to note that even 
though people like to go there. Sea World is a corporate 
interest in San Diego. It's an amusement park. It is not a 
surface water quality dependent activity. 


It discharges wastes to our surface waters, but 
it is not a recreational activity dependent on clean water. I 
think that is the point. It shows, because they are a 
discharger with a permits. 

In fact, when their permit comes before Regional 
Board, Mr. Milch, as their counsel, will not even be able to 
vote on that. 

So it's not the exact right thing. 

SENATOR AYALA: Thank you. 

SENATOR LEWIS: Thank you very much. 

Mr. Milch, would you respond to the point about 
the qualification? 

MR. MILCH: Yes, Senator. 

It was suggested that if you really want to make 
this easy, talking to me, join an anglers' club, or show your 
membership in the Natural Conservancy, or something else, for 
$25 a year. I could have done that. 

I did not do that as far as fishing goes. I 
didn't do it purposely on any of the other recreational areas. 

But contrary to what my friends have said, I 
think the involvements that I have had and continue to have, 
especially as relate to the recreational areas in San Diego, 
show strong support of that particular area of the Code. 

We can't be all things to all people. I can't be 
a member of their organizations, and this organization, that 

What we have to do is carry through in the spirit 
of what that Water Code section calls for. And I believe, with 


probably 30 years of involvement, which continues now, well 
beyond just financial contribution, that I fulfill the spirit of 
that Code section. 

But I did want to clarify, although Senator Ayala 
made it sound good, that my involvement with Sea World -- which, 
I have to say, has one of the finest records relating to 
pollution control and honoring of their permit — they have not 
been before the Water Quality Control Board certainly during my 
period of time, and I don't know when they were last there. 
They have never been cited for any problem, so I'm glad I 
represent them. But obviously, I could not sit at any hearing 
involving them. 

I'm proud to be associated with them, but I 
couldn't participate. But everybody has conflicts along the 
way. You can't examine whose friends, whose clients a 
particular Board member has and say, there's going to be a time 
when that person comes up before you, and thus, you shouldn't be 
sitting on the Board for the ten thousand other things that you 
adjudicate and rule upon. 

I will try to be a fair Board member. I will try 
to be an honest Board member, and I will avoid any conflicts. 

The one conflict that the Environmental Health 
Coalition spoke of, I brought up at the beginning of the meeting 
and asked our board counsel under the facts, if I had a 
conflict, and he said no. This is even though Ms. Hunter said I 
should recuse myself. But I have to go with what the counsel 
says on those matters, or else every time a member of the public 
comes up and says, "Don't participate," they have just lost one 


member . 

SENATOR LEWIS: Mr. Milch, to bring some closure 
to this issue, since you don't want to use Sea World as your 
example, the Code does say, "One person from a responsible 
nongovernmental organization associated with recreation, fish, 
or wildlife." 

What responsible nongovernmental organization are 
you associated with or affiliated with? 

MR. MILCH: I am affiliated with the Friends of 
the Park. I am affiliated with about seven organizations in 
Balboa Park. Although it is not water dependent except for 
irrigation, it is one of our recreation cores. 

I have been very strongly involved, and this is 
historically, with Mission- Bay. When I was Chairman of the 
City's Park and Rec. Board for eight or ten years, I basically 
over saw the development of the Mission Bay Master Plan, then in 

So, I would say I am not a wet part of the Code, 
although, as I said in my letter, I'm a swimmer. I swim in the 
ocean, I fish in the ocean. I am not a card-carrying swimmer or 
a card-carrying fisherman, but I am a card-carrying recreation 

SENATOR LEWIS: It seems from my point of view 
that it's certainly a close call, and it'll be ultimately up to 
this Committee to make that judgment. 

MR. MILCH: Yes, sir. 

SENATOR LEWIS: I wanted to ask, though, about 
the question about whether or not, since you'd be recusing 


yourself on any potential conflicts involving Sea World, on this 
particular Board, when you abstain or are conflicted out on 
something like that, what is the impact of that vote? Do you 
have to have a majority of the Board voting to pass a measure? 

MR. MILCH: We have nine Board members, and I 
don't know what the rules are. 

MS. HUNTER: I can speak to that. 

SENATOR LEWIS: Just to boil it down, would your 
abstention, if Sea World was trying to gets some kind of a 
permit, or variance, or whatever, and you were conflicted out 
and had to abstain, does that have the same effect basically as 
a no vote? 

MS. HUNTER: Well, it leaves you with eight, 
provided no one has to recuse themselves. Then, instead of nine 
Board members, you have eight. 

SENATOR LEWIS: And they need five affirmative 

MS. HUNTER: Yeah, you would. 

What you don't have is anybody at the table who 
represents fish, wildlife or recreation. 

See, each person has a role and expertise. 
There's a public; there's an ag. So, the fish, wildlife and 
recreation is not at the table anymore. They're gone. 

SENATOR LEWIS: At least in terms of this 
particular issue, where you're concerned that he has a conflict 
of interest, and he admits that he does, and he's going to 
recuse himself at least on that particular question, you can't 
do any better than knowing that at least you have one member 


that can't possibly vote on behalf of Sea World. 

MS. HUNTER: But nobody up there is defending or 
brings expertise about fish, wildlife, and recreation. So, when 
we're looking for the balance of interests, it's gone. Because 
that most sensitive use of the water is completely undefended on 
the Board. That's why it's a very serious issue. 

Even though we still need the five votes, the 
whole interest, the whole everything, it's gone. We have no 

SENATOR AYALA: Point of information that I'd 
like to inquire about. 

SENATOR LEWIS: Just a minute. 

Mr. Milch, you were going to comment? 

MR. MILCH: • I would say that in each of the 
special categories of membership — there's an agricultural 
member. There is, I think, a water member — each of them have 
the potential of having a conflict when it touches upon that 
very specific area. And each of those members would be required 
to step down if they had such a conflict. 

So, I don't think it's the problem that 
Ms. Hunter indicates. 

SENATOR AYALA: I'd like to inquire, are you 
familiar with, the ladies here, with Harriet Stockwell? 

MS. HUNTER: I am. 

SENATOR AYALA: What was her background? 

MS. HUNTER: My understanding was that her 
qualification, her simple qualification to be on the Board was 
that she was a member of something like the National Wildlife 


Federation, that she had a simple membership in that 

I would agree with Mr. Milch. I don't think 
that's adequate or enough. I think that is not in alliance with 
the intent of the Water Code. 

The Water Code means to have somebody there who 
defends those interests, who has a demonstrated knowledge about 

SENATOR AYALA; What about in a Donna Damson? 
What was her background? 

MS. HUNTER: Donna Damson was appointed because 
she was a representative. She worked in the Zoological 
Society's public relations department. 


MS. HUNTER: Zoological Society public relations 
department . 

We did not oppose her because we had a policy of 
trying to work with the people that come, and since she hardly 
ever spoke, frankly, on any issue — 

SENATOR LEWIS: So, you only selectively bring 
about this opposition. 

MS. HUNTER: Well, I don't think that's entirely 
fair. We bring it up when it's clear that the interests are not 
being served. The point of the balance of the interest, and I 
think — 

SENATOR LEWIS: Let's be fair. You're making a 
major point out of him not being qualified because of your 
reading of this Code section. 



SENATOR LEWIS: I think Senator Ayala has just 
asked a very valid question, which you seem to be rather 
inconsistent on. 

MS. HUNTER: We don't oppose every appointee that 
comes down. We oppose the ones that we think are inappropriate 
for the position. 

I want to also say that the conflict issue, you 
know who it comes up with the most on our Regional Board? It's 
going to come up with Mr. Milch, and it came up with Mr. Loriman 
because he was sitting in the public spot, and his law firm and 
himself was the attorney for a number of Bay polluters. 

So, it's the attorneys that are ending up being 
conflicted again and again and again on these issues. 

We are committed to try to work with the 
appointees that we are sent. When we can't, when they are 
clearly defending the interests of the polluter, when they are 
clearly not defending the interests that they were appointed to 
represent, then we're here. 

We can't come up here every day, and we don't do 
that. We try to work with the people that are appointed. In 
this case, it's nothing personal against Mr. Milch. He's a very 
nice person. He just doesn't represent the interests of the 
position that he fills. 

SENATOR LEWIS: Any other questions. Senator 

Senator Hughes. 

SENATOR HUGHES: Thank you very much. It's really 


been some interesting testimony, but it hasn't answered all of 
the questions that are still in my mind. 

I'm really charmed by the fact that you do a 
couple of things that I don't do, and I admire you for it. I 
enjoy fish, but I can't catch them. I like to watch people 
swim, but I can't swim. So, you've got two strikes ahead of me. 

But as I read this category that Senator Ayala 
continued to read, and witnesses up before us read, it says, 
"One person from, " and I guess this is about the fourth time 
you've heard this, but I want to repeat it again. "One person 
from a responsible nongovernmental organization associated with 
recreation, " and you cited some of the organizations that you 
belong with. I didn't hear you site anything with fish or 

And then in the preamble to this category in the 
Water Code, it says, "Each Board shall consist of following nine 
members appointed by the Governor, each of whom" — each of 
whom — "shall represent or act on behalf of all the people and 
should reside or have a principal place of business within the 
area," and it lists these other categories. 

Could you tell me the other categories that we 
did not mention? 

You did a great job on the recreation area, but 
this is a water control board. You didn't say anything 
specifically about fish or specifically about wildlife. 

Would you do that now, please? 

MR. MILCH: Yes. Specifically about fish, as I 
say, the best I can do is that I fish in the lakes and in the 


ocean, and more particularly in recent years, in the Sea of 
Cortez. And I am a financial supporter of organizations 
relating to the Sea of Cortez to keep these waters pure. 

SENATOR HUGHES: You know, I was also a little 
bit confused, because I know you're a bright man. If you 
weren't, you wouldn't be a member of a major law firm that is 
counsel to several entities. 

But you said just a few minutes ago, when we were 
discussing I think it was a question from Senator Lewis that 
said something about how many votes does it take, and you said I 
don't know. And you said, I don't know what the rules are. 

And in the next moment, after one of the 
witnesses up at the table said it took eight votes, I believe, 
or the question was did it really take five votes, and you said, 
yes, it takes five. 

So, you do know. Are we getting you upset? 

MR. MILCH: No, you're not. Senator. 

SENATOR HUGHES: But you're getting me confused, 
because I really want to know where you're coming from. 

MR. MILCH: My first thought when I heard the 
question was, was there a special rule of counting the majority 
when a person has abstained, as opposed to being just absent? 

SENATOR HUGHES: Can you answer that question? 

MR. MILCH: And then I thought a little more 
logically that it takes five votes for a majority if you have 
nine, and it still takes five votes for a majority if you have 

SENATOR HUGHES: Right. So, you do know the 


rules. So, we were confusing you. I guess we have to plead 

The other thing is that, you know, all of these 
other categories are specific. Your category is specific in 
three different areas. 

You've spoken well for the area of recreation 
because you enjoy the recreational facilities yourself, but in 
terms of your expertise in reference to fish, other than being a 
fisherman and probably a consumer — I hope you eat the good 
things that you catch, or at least capture them and put them in 
captivity somewhere so that you can look at them — and in 
wildlife, those are two other areas, those are two major areas 
where you have not exhibited, to my satisfaction, your areas of 

Now, when it gets to the legal matters, and 
whether you do in fact have a conflict or not, I think you 
indicated you do not vote on those issues that you think it 
would be a conflict in. 

I would hope that we could put this discussion 
over, because you've been on the Board not fully a year yet. 
And you do have some more time so that we could explore some of 
these areas. And I would like to afford Senator Burton an 
opportunity to hear from you, an opportunity to review your 
application and give us some guidance and counsel in this area. 

And I don't want him to feel disinfranchised. 
I'm certain he was unable to be here today, but I appreciated 
the having the opportunity to hear what you had to say. 

I would request of the Committee that we put this 


over at least for a few days to allow the Senator, who is not 
present and Chair of this Committee, to have an opportunity to 
meet you and to listen to your case a little more. 

MR. MILCH: Senator, if I could make one 

As to the category assigned to me, I don't 
believe that it is intentional that the candidate have 
preeminence in each of those fields: fishing, wildlife, and 

I think that that it is a choice of those that 
the candidate should come from. 

SENATOR HUGHES: Well, you know, there's some of 
us who don't recreate at all, so we would never fit in any of 
those categories. And there's some people who never eat fish, 
look at fish, or like fish, and there are city folk like me that 
know very little about wildlife, other than wild cats or stray 
dogs. So, we could be excluded from that area. 

But what I'm asking the Committee to do is to 
just give us a chance to further mull over this. We've gotten a 
lot of correspondence in reference to you, both good and bad. 
Give us a chance to make the right decision. 

SENATOR LEWIS: Mr. Milch, that's a standard 
courtesy that we extend to every one of the Members here, is to 
allow a vote to be postponed to a later date. We can do so 
without jeopardizing your confirmation. 

So, we're going to put this matter over. 

MR. MILCH: Very good. 

SENATOR LEWIS: Thank you for sharing your time 


with us today. 

MR. MILCH: Will that be another hearing, sir? 

SENATOR LEWIS: That will be up to Senator 

SENATOR HUGHES: He is the only one who hasn't 
had a chance to ask you on a question. 

MR. MILCH: Very good. 

SENATOR LEWIS: Thank you. 

Going back on schedule, we have next up 
Dr. Thomas Joas, Member, Medical Board of California, Division 
of Licensing. 


DR. JOAS: Good afternoon. 

Thank you for the opportunity to appear before 
you today. 

I am Dr. Thomas Joas, appointee to the Division 
of Licensing of the Medical Board of California. I have served 
on the Medical Board for over four years and currently serve as 
its President. 

These have been very productive years for the 
Board. There have been remarkable changes made which have 
improved the protection of Californians who use the services of 
the 104,000 physicians licensed to practice medicine in this 

Major issues have confronted the Board during 
this time and have had a direct impact on the patient consumer 
and how they use the services of the medical community. Some of 
these include enhanced public information. 


The Board has consistently supported the 
expansion of information made available to the consumer. The 
most recent expression of this is the support of 7VB 103, 
Figueroa, passed in last year's session, and implemented in 
January of this year. 

As a result, California now makes available to 
the public on the Internet or by telephone a doctor's name, 
business address, license status, year first licensed, any 
licensing disciplinary history, loss of hospital privileges, 
criminal history, and malpractice judgments or arbitration 

With the exception of Massachusetts, this is the 
most open and informative medical consumer information program 
in the nation. 

Specialty board advertising is another issue 
which we have addressed. The Division of Licensing developed 
standards which enable the enforcement of restrictions on a 
physician's ability to advertise as being board certified unless 
they are a diplomat of a board approved by the American Board of 
Medical Specialties, or approved as equivalent by the Medical 
Board of California. 

This action has limited the ability of physicians 
to potentially mislead consumers by advertising board 
certification in a specialty which does not have the rigorous 
standards of additional training and experience required by ABMS 

Other issues encountered by the Division have led 
to programs or policies which have resulted in consumer 


protection in a more indirect way, through the licensure 
requirements or restrictions placed on physicians and other 
medical professionals. These include midwifery licensure. 

I chaired the committee which worked diligently 
over many meetings to define and establish the standards which 
led to the first ever lay midwife license in California. 
Expectant mothers who use the services of a midwife can now be 
assured that they meet the qualifications and training which 
assure their competence to practice safely. 

Out-patient facility accreditation. The Division 
has developed regulations and implemented a program by which 
facilities where out-patient surgery is performed are required 
to be accredited. This accreditation assures that a variety of 
personnel and facility standards have been met if a patient has 
surgery in that facility. 

Notwithstanding the above measures to improve 
facility standards, we have become aware of the growing use of 
these facilities in the performance of certain cosmetic surgical 
procedures which have led to tragic outcomes. The Board has, 
therefore, established a Plastic Cosmetic Surgery Procedures 
Committee, of which I am a member, which is investigating the 
cause of some of these problems and what measures can be taken 
to limit their occurrence. 

Another issue related to improved patient care 
includes a matter which has been brought to the attention of 
this Committee, and which I believe has been presented most 
unfairly. Specifically, it has been alleged that I have shown a 
bias toward some group or groups because of work that I 


performed leading to the repeal of Section 1324 of the 
California Code of Regulations. 

Section 1324 allowed for non-ACGME accredited 
sites to offer training to international medical graduates in 
fulfillment of the final requirement for physician licensure. 
It was only program in the nation which allowed for such 
training in a setting not approved by the Accreditation Council 
for Graduate Medical Education, the agency which establishes 
postgraduate training standards for physicians. 

Let me express the concerns which arose from our 
study of these programs. We compared a group of international 
medical graduates in ACGME approved programs and those — and a 
group of those trainees in the 1324 Program. 

First of all, the ACGME programs are customarily 
in teaching hospitals. Teaching hospitals are usually 
affiliated with universities which have wide variety of 
disciplines and opportunity for trainees to avail themselves of 
additional education. 

1324 Programs exist in community hospitals where 
the primary mission not teaching but patient care. 

The trainee in an ACGME approved program receives 
a stipend. The trainee in a 1324 Program pays for the 

Another cause for concern was the passage rates 
on examinations. The written failure rate among those having 
trained in an ACGME approved program was 17 percent. Those 
international medical graduates which trained in the 1324 
Program failed the written exam by 60 percent. 


The oral failure rate among those trained in an 
ACGME approved training program was zero. Those trained in a 
1324 Program was 16 percent. 

The number of consumer complaints lodged against 
trainees having trained in an ACGME approved program was one. 
The number of complaints lodged against those having trained in 
a 1324 Program was three. This doesn't seem like a great 

SENATOR HUGHES: May I ask a question at this 

SENATOR LEWIS: Yes, Senator Hughes. 

SENATOR HUGHES: Now, in 1324 Programs, these 
potential physicians pay to be in the program? 

DR. JOAS: Yes, ma'am. 

SENATOR HUGHES: And they have no sort of 
guarantee that they're going to pass these tests? Or, they pay 
to get licensure? 

DR. JOAS: No. What I'm saying is, they pay for 
the training that they receive in these institutions. 


DR. JOAS: There is no guarantee from any 
institution, whether it be university affiliated, 1324, or some 
other training program. There's no guarantee that anybody will 
pass an examination. 

SENATOR HUGHES: So, when they set up this 
Section 1324, what was the reason for setting it up? To show 
that we had no bias in this state against anyone who was a 
foreign medical graduate? Was that the purpose of it? 


Or, was the purpose of it to encourage people, to 
encourage physicians to serve in the rural and underserved areas 
of the state? Was it both purposes; do you know? 

DR. JOAS : Yes. My understanding was that if the 
program was set up, that the people that had trained in those 
programs would do a couple of things. They would go to their 
particular ethnic communities and serve, as well as serving 
underserved areas in both rural and urban areas. 

And also at that time, there were a significant 
number of farmworkers who had no access to medical service. And 
it was the intent of the program, going back through the 
legislative history of the program, it was the intent of the 
program that these individuals would move into those communities 
as well. 

We also have some statistical evidence, both in 
California and nationally, which suggests that that isn't true. 
And as you know, the Medical Board is not a medical distribution 

There is no way that we can guarantee that 
someone that graduates from any training program will go where 
ever. Most people go where they feel they can find a spot, a 
nitch, and make a living. 

It's a free-moving society, unlike a country like 
Canada, for example. I trained in Canada. So, in a sense, I'm 
a foreign medical graduate. 

SENATOR HUGHES: But you went to an accredited 

DR. JOAS: Certainly. I trained in Canada. I 


passed my examinations, and I'm an American citizen. But I 
fooled around in college, didn't have the grades, and went where 
I could get an education, and that was in Canada. And I don't 
regret it for an instant. It taught me a lot about my own 

Believe me, for those people who believe that 
Canada is the 52nd state, all you have to do talk to a Canadian 
and you understand that it isn't the 52nd state. It's a foreign 

And I trained in San Francisco, at the University 
of California in San Francisco. 

SENATOR HUGHES: Yes, but you then trained at an 
accredited hospital. 

DR. JOAS: Yes, ma'am. 

SENATOR HUGHES: Is that what made the difference 
you feel in your ability to be able to pass the required 
examinations to get licensure? 

DR. JOAS: No. I think it was my own ability to 
go through medical school. And I think it was my ability to 
achieve what I wanted to achieve within my training. 

I had passed all the examinations by the time I 
was accepted for additional training at UCSF. 

SENATOR HUGHES: But even though these 
applicants, these trainees, are 1324 participants, they, when 
they go to community hospitals, these are not necessarily 
accredited institutions? These community hospitals, they are or 
are not? 

DR. JOAS: We could talk about accreditation in 


different ways. 

They are accredited by the Joint Commission. 


DR. JOAS: But they're not accredited by the 
Accreditation Council for Graduate Medical Education. 

SENATOR HUGHES: As a teaching institution. 

DR. JOAS: Exactly, and that's the difference, in 
my mind. 

SENATOR HUGHES: Right. Thank you very much. 

DR. JOAS: So, going on with the comparison, and 
looking at the consumer complaints, and recalling that the total 
number of trainees in 1996, there were 8, 662 trainees in ACGME 
approved programs, and 1100 of those were international medical 
graduates in ACGME approved programs. 

In the 1324 Program there were seven. And if you 
compare the number of complaints to the total number of 
international medical graduates in training in 1996, this number 
now becomes much more apparent. 

Consumer complaints among those that trained in 
ACGME approved programs was one in 1100 — one in eleven 
hundred. For those in 1324 Programs, it was 3 out of 7, okay. 

SENATOR HUGHES: Are you aware — 

DR. JOAS: May I just finish with my table, 
please. Thank you. 

So, if I could expand on that a little bit 
further, after the national matching program occurs in 
California, there are still available the National Residency 
Matching Program occurs in California. There are still, after 


that program occurs, 200 slots in California in acceptable 
training programs that are left unfilled, which are up for grabs 
by any qualified applicant, whether it be an American medical 
school graduate or an international medical school graduate. 

That was the final point that I wanted to make. 

SENATOR HUGHES: Are you aware that any 1324 
Programs that regularly trained foreign medical students, are 
you aware that any of these students then went on to pass their 
licensing test? 

DR. JOAS : Yes, some of them did. 

SENATOR HUGHES: Any idea how many? 

DR. JOAS: I can't tell you how many. Senator, 
because the information — I don't have that information 
available to me, but I can certainly get that information. 

SENATOR HUGHES: I would appreciate that. Thank 

DR. JOAS: So then, I made the decision, faced 
with this data, that I supported the termination of this program 
along with the other members of the Division of Licensing, so 
that I was one of seven unanimous votes supporting abolishing 
the program. 

One of the other things that the opposition has 
stated is that because of this, I'm biased. But at the time 
that we abolished the program, I said — I directed the staff of 
the Medical Board to make us, the Medical Board, more user 
friendly in getting information available to foreign medical 
graduates or international medical graduates as to the 
availability of ACGME approved programs after the match had 



The other charge which is offered to claim that I 
am biased is that I led a move to eliminate the 2112 Program. 
The facts do not bear out this charge. In my tenure on the 
Board/ we have reviewed seven 2112 Programs and ultimately 
recommended approval of four. 

The three for which 1, as one member of a review 
team, did not recommend approval include the VA Hospital in San 
Francisco because California has no jurisdiction over federal 
facilities, Keoywa Delta Hospital in Visalia because it proposed 
as the outstanding specialist someone who resided and practiced 
in Oregon and precluded his ability to provide meaningful 
direction and guidance, and Davies Medical Center in San 
Francisco, because in the opinion of the review committee, the " 
program director did not meet the standard of outstanding 

In summary, please consider the totality of my 
record as you determine the standards which a member of the 
Medical Board of California should possess. I believe that my 
record indicates that I have remained true to the ideal of 
public protection through efforts discussed here today, and in 
all of other work that I have performed on behalf of 
California's public. It was in the pursuit of and consistent 
with the goals of protecting the public that I have taken the 
the position which we are now discussing. 

I urge that you separate the interests of the 
few, who would protect their own turf, from the many that look 
to the Medical Board and its members to protect their health. 


Thank you. 

SENATOR LEWIS: Thank you. 

Senator Ayala for questions. 

SENATOR AYALA: Doctor, you were in involved in 
abolishing 1324 regulations? 

DR. JOAS: Yes, sir. 

SENATOR AYALA: Can you tell us, briefly, why you 
did that? 

DR. JOAS: I have to say that I was involved in 
it, but I was involved in it with a group of people. 

SENATOR AYALA: Why did you do it? Why was that 

DR. JOAS: I thought that the 1324 Program 
perpetuated a lower level of training for a group of people that 
needed a higher level of training. 

If I would have been king, I would have said, 
"Please go to an ACGME approved program and take your chances, 
there, because you'll get extremely well-qualified people out of 
those training programs." 

So that — I did not want to see the consumers of 
the State of California be open to a two-tiered type of training 
background. That was my perception of the training program, and 
those persons on the Division of Licensing at the time that we 
proposed abolition of the program saw it unanimously way as I 

SENATOR AYALA: So you actually were opposed to 
lowering the bar for the practice of quality medicine? 

DR. JOAS: I am opposed to lowering the bar. 


absolutely. I think that California deserves, and I think that 
California/ by and large, has excellent medical care. 

And I think that it's the mission of the Medical 
Board to continue to proceed serve that through consumer 
protection, vigorous enforcement of licensing, and vigorous 
enforcement of the Medical Practice Act. 

SENATOR AYALA: I have a problem with lowering 
the bar for any reason, even though it could help underserved 

Why do we want to give them inferior medical 
practice just because they happen to be in the underserved 
areas? They should get just as good a quality of medical 
practice as anywhere else, downtown Los Angeles, as far as I'm 

And that goes for, people that are telling me 
that veterans are homeless, and they should be given some kind 
of treatment by providing the psychologist to provide prescribed 
medicine. That's ridiculous. Those veterans are entitled to as 
good quality medical treatment as anybody else is, and I would 
oppose any lowering of the bar for any reason, especially when 
it comes to the practice of medicine. 

DR. JOAS: Senator, I agree with you. 

SENATOR LEWIS: Dr. Joas, I know we're going to 
have a little more about this when we hear some additional 

I wanted to just change topics real quickly for a 
second and ask about physician discipline. 

DR. JOAS: Yes. 


SENATOR LEWIS: Although some improvements have 
been made speeding up the time table, it still hasn't kept up 
with going through the whole process. I think it takes three 
years ultimately to bring about, on average, a discipline. 

It hasn't yet met legislative targets. 

What particular ideas or suggestions do you have 
to speed up the whole process. 

DR. JOAS: Okay. There are a couple things that 
have occurred so that the — to speed up the process. 

One of those is putting a deputy district 
attorney in the district office, which we did — which we have 
done on a trial basis, and will now be expanding because it has 
shortened the time remarkably that it takes to bring charges 
against or throw out a case. So, that's something that we were 
in the process of doing. That's something that we testified to 
at the Sunset Review Committee, and that's something that we 
will been expanding, so that by, I believe, July of this year, 
there will be a deputy district attorney in all of our twelve 
district offices throughout the state. 

And if you could see the table — and again, 
I'm sorry. I don't have the table with me — but if you could 
see the table, it's a significant time reduction in the time 
that it brings opening a case or closing a case. I'm thinking, 
like, the change has been almost 70 percent. 

The other issue is recruiting and retaining good 
enforcement people. As you know, they are all sworn peace 
officers, but the workload in areas like Los Angeles is 
unbelieveable. And our budget is limited by licensing fees. 


So that we currently have a bill before the 
Legislature to increase licensing fees in order to expand our 
budget, and therefore, hopefully, recruit more talented people 
that could live in areas such as Los Angeles and carry a 
higher -- and carry a lesser caseload so that some of those 
cases would come to conclusion more quickly. 

SENATOR LEWIS: Thank you. 

At this time, let's proceed with anyone wishing 
to testify in favor of the confirmation. 

MR. BARNABY: Mr. Chairman and Members, I'm Bill 
Barnaby, representing both the California Society of 
Anesthesiologists and myself here today. 

I've had the pleasure to work with Dr. Joas for 
over fifteen years. I know him as a decent, honest, caring 
person with a strong and abiding commitment to the practice of 
quality medicine in this state. He's well known in the medical 
community for his efforts to set up peer review programs in the 
California Society of Anesthesiologists, for example; for his 
insistence on quality medical care in his own practice and among 
his colleagues the San Diego. 

He's an outstanding physician and outstanding 
citizen. I'm very proud to urge that he be confirmed here 

Thank you. 

SENATOR LEWIS: Thank you, Mr. Barnaby. Next. 

MR. SYPHAX: Scott Syphax for the California 
Medical Association. 

We, too, support the confirmation of Dr. Joas. 


We have worked with Dr. Joas for the past four years in his 
capacity as a member of the Medical Board, and we have found him 
to be fair, open-minded, and very responsive to both the 
concerns of the citizens of California in terms of patient 
advocacy, and also to the medical profession itself in terms of 
trying to work creatively in order to enhance the quality of the 
medicine that is delivered in California. 

With respect to the 1324 Program, for the record, 
CMA supported the abolition of this program for the reasons that 
Dr. Joas stated. 

In fact, oftentimes in front of the Medical 
Board, the California Medical Association is sometimes in 
opposition with some of the consumer advocacy groups and also 
members of the Board. Dr. Joas does not always agree with us on 
any ranges of issues. As a matter of fact, he usually disagrees 
with us more than he agrees with us. 

However, there was a broad consensus from all 
corners that this program, had, if it had served a purpose, had 
outlived its usefulness, and that its abolition was taking a 
step forward in enhancing the consumer protection standards in 

Once again, we would urge your Aye vote on his 

SENATOR LEWIS: Thank you, Mr. Syphax. Next. 

MR. RANDLETT: Jim Randlett, representing the 
California Society of Plastic Surgeons. 

We also are in support of the confirmation of 
Dr. Joas. We had the opportunity to work with the Division of 


Licensing, of which Dr. Joas is member/ on the implementation of 
two very important laws. One was SB 2036, by Senator 
McCorquodale, which dealt with the advertising credentials of 
physicals that were claiming to board certificated. 

This was a very long, involved regulatory process 
by the Board, plus the determination of an equivalency process 
that took many hours of the Board's time. 

We are here to tell you that on all occasions did 
Dr. Joas and the other members of the Division look towards the 
high quality standards and the protection of the patient in 
implementing that law. 

The second law that Dr. Joas and the Division 
were responsible for was one that he mentioned, AB 595, that was 
authored by Jackie Speier. This set up facility standards for 
out-patient settings that are not otherwise licensed by the 
state or certified by the Medicare program. 

This is a major piece of patient protection to 
make sure that when a patient goes to one of these facilities, 
has general anesthesia or conscious sedation, that there are 
minimum standards to assure that if an emergency does occur, the 
patient will be protected. 

In implementing that law and writing the 
regulations and the accreditation process. Dr. Joas and the 
Division, once again, went to the high quality standards to 
protect the patient. 

For these reasons, we would advocate his 
confirmation. Thank you. 

SENATOR LEWIS: Thank you very much. 


Sir, are you in favor of confirmation? 

MR. CUNY: Yes. 

My name is Frank Cuny, and I'm the Director of 
the consumer group called California Citizens for Health. 

And I've had an opportunity to attend almost all 
the Board meetings for four years. I've had an opportunity to 
observe the Medical Board, Dr. Joas, and the committee's head. 

Although we have some strong philosophical 
differences, being supporters of alternative medicine, I think 
he's highly qualified for the position, and a very fair, 
reasonable person, and does his research very well. 

We support his confirmation. 

SENATOR LEWIS: Thank you very much. 


MS. GIBSON: My name is Faith Gibson. I'm a 
nationally certified professional midwife and a California 
licensed midwife. And I represent the American College of 
Domicilliary Midwives, which is an organization of both 
physicians and professional midwives that provide 
community-based services. 

I also have been attending public meetings of the 
Medical Board as a concerned citizen since May of 1993. So, for 
the last five years, have had an opportunity to observe the 
professional qualities of the various appointed members of the 
Board, including Dr. Joas. 

It's my opinion that Dr. Joas is well qualified 
to continue in this important capacity, and that he will 
continue to do an excellent job as a member of the Board. 


It was my pleasure to work with Dr. Joas from 
March of '94 to September of '96 as a citizen member of the 
Medical Board's Midwifery Implementation Committee. We met 
several times to work out the technical details for the newly 
passed Licensed Midwifery Practice Act. I believe that that was 
something of a difficult assignment for Dr. Joas, as he had no 
particular background in the discipline of midwifery or any 
natural sympathy for the plight of midwives. There was a lot of 
opposition from the medical community, who were not particularly 
pleased with the midwifery bill, a lot of pressure against it. 

Dr. Joas resisted all of this negative pressure 
and was willing to read large quantities of information about 
midwifery to familiarize hijnself with the topic, and able to 
press forward in spite of all of the controversy and the 
complexity, and work towards the fair implementation of the 
midwifery bill. 

I believe that the professional abilities 
displayed by Dr. Joas during the four years that he served on 
the Board will continue to serve well the people of California. 

I respectfully request that Dr. Joas appointment 
as a member of the Medical Board be confirmed by the Senate. 

Thank you. 

SENATOR LEWIS: Thank you very much. 


MS. MARCELINE: My name is Tosi Marceline. I'm a 
licensed midwife here in California. I'm also representing the 
California Association of Midwives. 

We are supportive of Dr. Joas' reconfirmation as 


an appointee of the Medical Board through many years of sitting 
through the same committee hearings that Ms. Gibson spoke of. 
We have noted how fair he is in difficult situations, how 
willing he is to learn new information, and how delighted we 
were that he could take on controversy and handle it to the fair 
representation of all viewpoints. 

So, thank you very much. 

SENATOR LEWIS: Thank you. 

Now let's hear from opposition or those wishing 
to express concern. 

DR. JOAS : Excuse me, may I interrupt? I have 
statistics now for investigations. Is it appropriate for me 
to ~ 

SENATOR LEWIS: Please expedite it. 

DR. JOAS: I'm just going to tell you that 
through 1997, the days had been shortened to 55 days in the 
Intake Unit, 23 days from Medical Consult and Review, 320 days 
for investigation, and overall, 123 days. 

SENATOR LEWIS: Very good, thank you. 

Now let's hear from opposition or those wishing 
to express concern. 

DR. RIDER: I'm Dr. J. Alfred Rider, formerly 
director of the PGY-1 Program at Davies Medical Center, which 
was abandoned by the Medical Board last year, after being in 
existence probably almost 20 years. 

I'm also a former President of the Medical Board 
of California. I was also instrumental in writing the laws that 
related to foreign medical graduates. 


7\jid what Dr. Joas didn't point out/ that there is 
a law on the books right now, 2101, 2102, which allows for 
foreign medical graduates to be trained in a joint JACH 
accredited hospital. 

The Medical Board adopted certain criterion: the 
type of hospital; the type of medical program it should be. 
Very strict program. And we followed that to the letter. 

And later on, I'm going to introduce people to 
you who've gone through the program, and show you that if it 
weren't for the program, those people would not be practicing 
medicine in the State of California. 

So, I'm speaking on my behalf, and also on behalf 
of many foreign medical graduates who which to oppose the 
nomination of Dr. Thomas Joas to the Division of Licensing. 

We feel he has demonstrated a cultural and racial 
bias against foreign medical graduates. He was the driving 
force and leader in the campaign to abolish the 1324 regulations 
that allowed for foreign medical graduates to get a one-year 
PGY-1 training program at medical centers such as Davies Medical 

Dr. Joas has stated that when he got on the 
Medical Board, his first priority was to abolish the 1324 
Program, since he did not believe in a two-tiered system that 
favored foreign medical graduates. 

We have a basic difference in philosophy with Dr. 
Joas. Many of the things that he pointed out that he takes 
credit for, the Medical Board has done, he had very little to do 
with. He's not on the Disciplinary Division, for example. And 


many of the things he pointed out, the Medical Board did. But 
the Discipline Division, they handle investigations; they h-ndle 
complaints, and so forth. 

Although this state has a high minority immigrant 
population, there are no specific programs to accommodate 
foreign medical graduates who would serve their community. 
Although there were only four programs such as the Davies 
Medical Center approved in the state, approximately 90 graduates 
went through these programs. These are 90 people who would not 
have gotten the training necessary to get a license in State of 
California, and although small, it's still significant. It 
gives the foreign medical graduate an alternate way, and some 
hope that he can find a training program, even though he's been 
turned down by the large universities and large teaching 
hospitals . 

It's very simple. If you want a good training, 
go to Harvard. Go on, go. Go to Stanford. It's a great 
place. Go on. But you're not going to get in. 

These foreign medical graduates don't get in. 
One of our big teaching hospitals in San 
Francisco, the Medical Director told me, "I will not accept any 
foreign medical graduates. I only take Americans, period." 

So, he said, go apply. So, I sent a girl to see 
him. He said, "I'll interview as a favor to you." He said, 
"I'm interviewing as a favor to Dr. Rider." 

He interviews and says, "I'm going to start right 
off by telling you, you have no chance to get in our program 
because I will not take a foreign medical graduate, period. I 


don't care what you've done, your qualifications/ whatever. 
Will not accept you." 

Now, you can say what you want to say, that's the 
way it is. 

When Dr. Joas points out that the matching 
program they have, and there's so many, a couple thousand. I 
went through it myself in the United States the day after the 
match. Didn't match. They're snapped up just like that. Most 
of them are not in California; they're in other states. And 
the ones that end up not being taken are things that are less 
desirable for the physician, especially the foreign graduate. 
For example, physical medicine, anesthesiology, psychiatry. You 
don't get the programs in internal medicine, family practice, 
that are available. They're all gone, and there's none there. 

Every person I've had in my program has been 
unable to get into an ACGME program. 

I don't have the records of the other programs 
that have been approved in the State of California, but I can 
attest to the fact that since 1984, I've trained 12 medical 
graduates. Two of these graduated from Argentina; two are from 
Mexico; four from El Salvador; one from Czechoslovakia; one from 
Hungary; one from Poland; and one from Russia. 

They all hold licenses in the State of 
California, and none have been subjected to disciplinary action, 
and they all passed their exam on the first crack. 

My program is better than any program in the 
state. There's not another state program that can say 100 
percent graduate, and 100 percent have not had any discipline. 


So I'm saying, if it's done properly, it's a 
very, very good program. And we've trained very excellent 
people. You're going to meet some of them here this afternoon 
and see what they're doing, and see if they aren't contributing 
to this state. 

Senator Hughes, you asked the question of Dr. 
Joas, what was the intent of the 1324? 

The intent was to allow the program for foreign 
medical graduates who could not get into other programs. And 
the hope was that they would go and serve in underserved areas, 
at least serve in their communities where they're familiar with 
their language and their culture. And by and large, that is 
what has happened. 

You can't force them, as Dr. Joas has said. You 
can't force them. You cannot guarantee they'll all pass. But 
in our program, they all passed. 

Another thing. To get into the program we've 
had, we've required them to pass the licensing examination, the 
written exam. They've all passed that. And then they're only 
left with having to have a year of postgraduate education in the 
State of California, and take an oral exam. They've all passed 

Now, you mentioned something about pay. We do 
not charge our students at all, zero. Several other programs in 
the state have had a minimal charge for administrative fees, 
because they consider them still students, I guess. But we do 
not charge. 

We have no financial interest. We do not gain 


anything from teaching these people. 

Some of these people are practicing in small 
towns, less desirable areas. Some are practicing in the barrios 
of San Francisco and serve a population it would be difficult 
for American medical graduates to serve. 

Six of my graduates have gone on to become 
specialists in areas ranging from family practice, to 
pediatrics, to internal medicine. In addition, there are 
trained fellows from Greece, Japan, Brazil, Argentina, Mexico, 
and India. With only a few exceptions, they have returned to 
their homeland to practice medicine in local communities, and 
thus benefit from the added expertise that the doctors have 

By abolishing the 1324 Program, Dr. Joas and the 
Medical Board of California has done a great disservice to the 
foreign medical graduate and to the minority immigrant 
community. The Board needs members who are more compassionate 
to the plight of the foreign medical graduate. 

I'd like to point out just a specific example. 
Sometimes we learn by specific examples. It brings it home to 

The last person who applied for the 1324 Program 
at the Davies Medical Center was Eugenia Garcia from Mexico. 
Although her application was submitted in a timely manner, and 
it was before Board's Special Program Committee on May 8th, 
1997, Dr. Joas and the Licensing Division refused to act upon 
her application because they knew they were going to vote to 
abolish the 1324 Program the next day. 


In spite of the fact, they scheduled public 
hearings the next day. We came down and testified. We were led 
to believe that this was an honest, open hearing, and they'd 
already made up their mind. It was a complete exercise in 

However, this action could not be put into effect 
immediately because it would have to be approved by the Consumer 
Affairs Division of Administrative Law. In other words, the 
next day, they voted to abolish it, but it still had to be 
approved by the Department of Consumer Affairs, Division of 
Administrative Law. Thus, the 1324 regulation was in effect 
when Eugenia Garcia 's application was submitted and should have 
been acted upon and not tabled. 

I happen to be on the State Bar Examining 
Committee. I've talked to some of my colleagues about this. 
They said that is a, quote, "breach of mandatory duty." 

In fact, the 1324 Program was not officially 
abolished until November, 1997. Thus, if she had been allowed 
to proceed, she probably would have been grandfathered in. 
Therefore, her medical training has been held up for at least a 
year because of these actions. This action by itself shows the 
complete insensitivity of Dr. Joas and the Licensing Division to 
the plight of foreign medical graduates. 

I got a letter from the Board that said, just 
because an application is submitted in a timely manner and is 
complete, we have no obligation to approve it. 

I would say, yes, but I think you have an 
obligation to act upon it. 


Suppose you change the law in this state that you 
have to be 35 years old to drive a car, and you're going to vote 
on that January 15th. And I have my application in on December 
20th, and I'm 21 years old. I don't think legally you can table 
my application on the grounds that you're going to change the 
law three weeks or a month later. 

Now, we mentioned -- he also mentioned the other 
program, which is a 2112 program, which allows for a foreign 
medical graduate to come to a place like the Davies Medical 
Center to develop specialty training in their particular field 
of interest so they can return home with the additional skills 
to make them outstanding in their field. 

SENATOR HUGHES: I'm sorry to interrupt you, 
Doctor, but before we get to this other program, I want to go 
back to what you were talking about, 1324 Program. 

It seems to me as though I read about a large 
number of patient complaints. Since you were so deeply involved 
in this, why are there so many patient complaints in the 1324 

DR. RIDER: My program, zero. 

SENATOR HUGHES: You had none. 

DR. RIDER: Zero; zero. 

SENATOR HUGHES: What about the other complaints? 

DR. RIDER: He mentioned three out of seven. I 
don ' t know about our programs . 

Let me just say approximately ten percent of the 
physicians in the State of California have complaints lodged 
against them every year; ten percent. And the longer in their 


practice, the more likely they are to get some kind of 

SO/ and then, while you're talking about — he 
mentioned the pass rate. I'd like to point out, the pass rate 
on the State Bar is about 55 percent. The Medical Board figure, 
if they through my program, they pass 100 percent. Other 
programs it's a certain percentage, and I can't remember, that 
didn't pass. But he didn't say whether they passed the second 
time around. Some people don't pass the first time. They have 
to take it again. So, it's 16 percent fail. 

SENATOR HUGHES: But you cannot practice law 
until you pass the State Bar. 

You shouldn't be practicing medicine until you 
pass the Medical. 

DR. RIDER: They're not practicing. 

SENATOR HUGHES: You're making the analogy 
between the State Bar passage and the Medical Board passage. 

It doesn't matter how many times you take either 
one of those exams, you shouldn't be out there actively 
practicing either medicine or law without having passed a 
qualifying exam. 

Especially, medicine is a matter of life or 
death. So, I don't see the analogy. 

DR. RIDER: They're not practicing medicine until 
they get their license. 


DR. RIDER: They do not practice until they get 
their license. That's illegal. 


SENATOR HUGHES: I don't understand the analogy 
that you made between law and medicine. 

DR. RIDER: Anybody that knows anything about 
mathematics/ if you take three out of seven, you can't project 
that to three hundred out of seven thousand. Anybody's been 
involved in a political race knows you can't take the first 
seven or eight votes and project that and say who's going to be 
the winner or whatever. 

I say, this is such a small amount, you can't 
draw any conclusions from that at all. 

We did a survey when I was on the Medical Board. 
We said, maybe some schools have better graduates than others, 
that are taught differently, that are less likely to have a 
discipline. You'd be surprised. We got no difference in the 
complaints from the Stanford graduate, the Harvard graduate, UC 
graduate, or the Loma Linda graduate, or Creighton University 
graduate. There was absolutely no difference between where they 
graduated and to whether they had complaints or not. 


Dr. Rider, you have a program to support 1324, I 
assume? That's what you're talking about? 

DR. RIDER: Do I have what? 

SENATOR KNIGHT: You have a program that supports 
the 1324 Program? 

DR. RIDER: Yes. I had a program at Davies for 
many years until the regulations — 

SENATOR KNIGHT: First of all, where is Davies? 

DR. RIDER: Davies is in San Francisco. It 


serves the Castro District, the Haight District, the upper 
Market District. 

SENATOR KNIGHT: It's a school? 

DR. RIDER: No. It's a private medical hospital. 
It's a public community hospital. 

SENATOR KNIGHT: You've indicated that 100 
percent of your students, whatever they're called, that go 
through the 1324 Program passed the exams and go on to practice 

DR. RIDER: That's correct. 

SENATOR KNIGHT: It says here that a 
substantially higher percentage of 1324 trainees failed the 
written and oral license exams. 

DR. RIDER: Not in my program. 

SENATOR KNIGHT: Are there other programs besides 
your program? 

DR. RIDER: There's three others down south. 

SENATOR KNIGHT: And their records are not nearly 
as good as your records; is that correct? Do we have any 

DR. RIDER: If the figures cited are correct, 
that may be true. But I'm saying it's such a small number, it's 
hard to really draw conclusions. You have to look at what kind 
of person did he start with. 

You've got to remember this, that the Medical 
Board approves every one of these programs. They approved the 
particular person who's going to go into that program. 

SENATOR KNIGHT: Then I assume they approve the 


programs that are failing students as well. 

DR. RIDER: Every program was approved by the 
Medical Board. They investigate it. They have site inspections 
every couple years. I've had five in the last ten years, I 

SENATOR LEWIS: Doctor, how many have gone 
through your program and are practicing medicine? How many have 
graduated from your particular program. 

DR. RIDER: From my program, we've had roughly 
one a year since 1984. We don't train more than one person at a 
time. It's a high, one-on-one program, designed to bring them 
up to the American standards. 

These people, by and large, not only have they 
graduated from medical school in a foreign country, they are 
licensed there, and they've practiced there for several years. 
So, they're more mature, but they need to get up to tune with 
the American program. 

SENATOR LEWIS: Other than the success rates, 
what differentiates your program from the others, which 
apparently are dragging down the success numbers? What 
differentiates your program? 

You have a 100 percent success record. And yet, 
apparently there's three other programs in Southern California 
which are tilting in the other direction that are making the 
comparisons somewhat unfavorable. 

First of all, how large are those other programs? 
You only graduate one a year in your program. 

DR. RIDER: They probably train two or three a 



SENATOR LEWIS: Dr. Joas, with regard to this 
whole controversy — 

DR. JOAS: If I had a particular bias, and I 
wanted to get rid of an opportunity for foreign medical 
graduates, I personally would have not chosen something that 
dealt with only seven individuals. I would have chosen 
something larger, which brings me to 2111 programs and 2113 
programs . 

These are programs which are run by ACGME 
programs. ACGME, the Accreditation Council for Graduate Medical 

Places like UCLA, UC San Francisco, Stanford, you 
name any of the large universities — 

SENATOR LEWIS: What particular fault do you find 
with Dr. Rider's program? 

DR. JOAS: Particular fault? 


DR. JOAS: The training is not at the level of 
the training of at an ACGME approved program. It's — the 
mission of a community hospital is not teaching. It's to take 
care of patients, as opposed to an ACGME approved program, like 
UCSF, UCLA. The mission there is to teach students, and not to 
have them and allow them to be reimbursed during their training 

SENATOR LEWIS: But in his particular program, he 
has said that he had 14 students that have all passed; 100 
percent of them have passed. There haven't been any complaints 


lodged against the 14. 

I mean, that sounds like a pretty good track 

DR. JOAS: It does on the face of it, but I would 
beg to differ with his statistics. 

I did not bring the specific statistics with me 
as to the break-out of every single program. 

But to have a continuation, in my opinion, to 
have continuation of a specific program that, across the board, 
does not meet the same standards as an ACGME program would be 
not beneficial or protective of the consumers of this state. 

I would also suggest that if this was such a 
burdensome issue, that the other 1324 Program directors would be 
here complaining as well. 

I don't see them in the audience. 
■ DR. RIDER: I think there's one other person 

SENATOR LEWIS: I was just going to say, with 
regard to consumer satisfaction or whatever, I would think that 
the fact that there's been a void of any complaints on these 14 
physicians, I'm wondering if, in regard to the action that you 
took, maybe you went too far. Maybe there would have been a 
better way to craft it. 

You could have cracked down on those programs 
that were not doing a sufficient job, but perhaps this program's 
doing a good job, and maybe you threw the baby out with the bath 

DR. JOAS: Again, this is not an unilateral 


action on my part. This was an action involving every member of 
the Division of Licensing. 

Someone — all of the individuals on the Division 
of Licensing at the time that this program was under 
consideration for abolishment visited one of the sites where 
this program existed. So that they all had an opportunity to 
view these programs in action. 

And/ all I did was co-author the report that 
indicated our findings. And the Division then made a 
judgemental call, and it was the whole Division, unanimously 
accepting the report to abolish the program. 

SENATOR LEWIS: Dr. Rider, on that point. 

The Board voted seven to nothing to do this. 

Are you going to be opposing the confirmation of 
each of the seven when they come up in future confirmations. 

DR. RIDER: I'm sorry, I didn't hear that. 

SENATOR LEWIS: The Board, I believe, voted seven 
to nothing to take this action. 

Are you going to oppose — 

DR. RIDER: Let me point this out. 

They have a Special Programs Committee. And 
there are, I think — there were five people on the Special 
Programs Committee. What they have recommended to the License 
Division, they do it. 

But Dr. Joas is a very forceful person. He and 
Dr. Friedman were on the Board together, the Licensing Division, 
the Special Programs. And Dr. Toke was the President of the 
Licensing Division at that time. 


Dr. Toke told me he was in favor of our program, 
and he would see what he could do to see that we get approved. 
So, when you have a subcommittee and they approve of something, 
it goes to the main division. Then they usually go on the 
subcommittee. And most of them don't know what's going on on 
the main committee, anyway. 

I'd like to read you something. This is from Dr 
Toke, President of Licensing, June 25th. "The decision to 
repeal Section 1324 is based on the overall performance of all 
of these programs and is not meant as a reflection on the 
quality of your particular program." 

That's what the President says, "not meant to 
reflect on my program, but overall." 


SENATOR LEWIS: Senator Knight. 

SENATOR KNIGHT: Is there a cost associated with 
the 1324 Program? 

DR. RIDER: Is there a cost? 

SENATOR KNIGHT: Who pays for it. 

DR. RIDER: Our hospital, I've been able to 
inveigle a very small stipend for them, even though they're 
considered students, of $600 a month. The student does not pay 

SENATOR KNIGHT: Somebody pays for their 
training? That's what I'm asking. 

DR. RIDER: We donate our time. 


DR. RIDER: Yes. 


SENATOR KNIGHT: What is the purpose of the 
program? Why is it designated as a program within the Board's 

DR. RIDER: It was originally begun when I was 
still on the Medical Board the first time. It was the Board of 
Medical Examiners, back in 1976. And it was recognized by the 
Legislature and the Board that there was a need for special 
programs of foreign medical graduates because there was a 
shortage of programs for foreign medical graduates. 

So, they set up 2101, 2102, to allow for this. 
Then the Board, over years, adopted certain regulations to 
comply with the law. The law says this, but you have to have 
such-and-such regulations to accommodate it. 

So, that was the background. And the idea was, 
one, find a place for them; and two, of the hope that they were 
to go into underserved areas and serve their minority 
communities . 

SENATOR KNIGHT: That's the next question. When 
you say they were supposed to go, they are foreign students. 
When you say go into the rural areas and to support their 
people, is that back in their home country, or in this country? 

DR. RIDER: Oh, no, no. That's in California. 
People that only speak Spanish, you go to the Mission District 
in San Francisco, and they're primarily Spanish speaking. 

SENATOR KNIGHT: I just wanted to know whether 
they were going to be here in California or go back in their 
home country. 

When they come to the 1324 Program, do they have 


to stipulate that that's what they're going to do? 


SENATOR KNIGHT: Do some of them go back to their 
home country? 

DR. RIDER: We question them, what they want to 
do, and we hope they'll do that. But by and large, if you are 
from Russia -- 

SENATOR KNIGHT: Do some of them go back to their 
home country? 

DR. RIDER: No, they've all immigrated 

SENATOR KNIGHT: None of them have gone — 

DR. RIDER: No, they're already immigrants. 

SENATOR KNIGHT: None of them have gone back to 
their home country. 

DR. RIDER: Who knows? But, the other program 
which I was going to go on to is the Fellow Ship Program. 

SENATOR HUGHES: Excuse me. Senator. If I may 
help you a little bit. 

These are physicians in their own country 
already, okay? They come here for an additional medical 

SENATOR KNIGHT: They were medical students in 
their own country. 

SENATOR HUGHES: No, they were physicians in 
their own native lands before they came here. So, they don't 
have to go back to become physicians again. They can just go 
back there and practice. 


SENATOR KNIGHT: But they've gotten additional 
medical training here. They've become specialists, or they've 
gotten more expertise, or they've gotten updated on the latest 

SENATOR HUGHES : The reason they are coming here 
is to practice here. 

SENATOR KNIGHT: None of them have gone back to 
their own countries. 

DR. RIDER: There are two programs. 

The 1324 allows the person to get licensed in the 
State of California. 

The 2112 is designed for a foreign medical 
graduate who wants to come and work under a specific person to 
learn something specific. For example, Dr. Bunkey at Davies is 
the world's authority on micro surgery. He does the transplants 
of limbs, you know, fingers, toes, all this kind of stuff. 
People want to come see him. I have a certain expertise. 
People want to come and work with me. 

We had, for example, in May, we had Dr. Carlos 
Gomez from Brazil who wanted to spend a year with me, get my 
training, or help him train in gastroenterology, and he'd go 
back to his country. 

What Dr. Joas pointed out is that the Division, 
in its wisdom, said that I hadn't documented that I was a 
clearly outstanding specialist in the field. 

This kind of hurts me, because I wrote that law 
and put that word in their because I would think we'd make a 
distinction between somebody that just had a board certified and 


somebody who was outstanding. 

SO/ in your packet here, I'd like to show you 
what I presented. I think this, again, goes back to the almost 
prejudice against the program, and then zeroing in on me. And 
it really hurt me to say that I wasn't an outstanding specialist 
in the field. 

You have a bibliography of some 180 papers. I 
have four degrees from the University of Chicago. I'm an 
Associate Professor of Medicine at Davies Medical Center. 

I was one of the first in the United States to 
call attention to polyps to cancer of the colon. I was the 
first to televise the stomach in black and white and in color on 
television. We developed that technique. I developed the Rider 
Motor Dilator for the esophagus. We developed an alergy test in 
the gastrointestinal track. 

Then, as this was going on, I remember calling 
Dr. Joas . I said, "Guess what?" In November, if you look in 
your packet, here's the magazine. It's called Practical 
Gastroenterology . And I am featured as the sage of 

And he said, "Well, that ought to put the 
frosting on the cake. This ought to do it, because I don't see 
how they can turn you down one now." 

Meanwhile, one of the program managers said, 
well, get some letters from your peers. I had eleven letter 
from peers all over the United States certifying that I was a 
truly outstanding specialist in the field. 

Then I got a letter back saying, well, you hadn't 


documented this, that. You need more evidence. You have to — . 

SENATOR KNIGHT: Is he being confirmed? 

SENATOR LEWIS: Doctor, we're getting a little 
far afield here. 

DR. RIDER: That's still to this program, to show 
you how they just. 

SENATOR LEWIS: Why don't you wrap up your — 

DR. RIDER: Anyhow, I just wanted to show you 
something. You have to be inter nationally recognized. Here's 
a medal from the President of Argentina, the Order of De Mayo, 
for teaching a foreign Argentine student. Now, that has to be a 
little bit of international recognition. 

So anyhow, the Board — and Dr. Joas, again, is 
one of the ring leaders, said I've not demonstrated that I am an 
outstanding specialist. They don't say I'm not. They say I 
haven't demonstrated. 

I think I am. My peers think I am. And I think 
they're wrong in having poor Carlos Gomez go back to Brazil 
after spending two months here, waiting and waiting, and hoping 
the Board would give him approval to spend a year in our 

SENATOR LEWIS: Thank you. Doctor. 

Let's hear from the next witness now. 

DR. PULETTI: My name is Ernesto Puletti. I am 
an Assistant Clinical in Professional Medicine at the University 
of California in San Francisco. I am Vice Chief of Staff at St. 
Luke's Hospital in San Francisco, and I have been an examiner 
for the Medical Board of California for the last 20 years, 



I was just going to reiterate the same thing, 
that in our program, Davies Medical Center, who, incidentally, 
is not only a hospital that is a community hospital. This has 
affiliation with UC, with the University of California in San 
Francisco for the orthopedic surgical program, and also for the 
surgical, general surgery. 

There was also a neurological -- neurosurgical 
residents were training with us, but the program has been 
interrupted because of there's not enough neurosurgeons to 
continue the program. 

Also, we have a very, very successful program 
with Dr. Bunkey, who is an internationally known surgical 
specialist, specializing in surgical implants on patients, 
different patients. 

So, the point I'm trying to make is, that 
hospital is not only a community hospital, but a teaching 
hospital also. 

Also I'm going to raise the fact that we do not 
get any money whatsoever from the trainees, and we don't have 
any money from the state. It's not a state supported program. 
It does not cost any money to the state, does not cost any money 
to anybody that comes the train with us. 

And also, I agree one hundred percent with 
Dr. Joas in the sense that we cannot have incompetent people 
pass the Board. And I can say that because I've been in the 
Medical Board of California examining, and we have a very strict 
protocol to pass physicians to obtain a California license. So, 


this has always been our goal. 

At the same time, our program, we know and 
neither Rider nor myself, nor anybody that is connected with the 
program will pass somebody — lower the standards to pass 
somebody. We have never, ever, under any circumstances promised 
that they were going to be passing the State Board if they come 
to the program. That's always been understood before anybody 
even can come to the program. 

Knowing Dr. Rider when I was Fellow of 
Gastroenterology at the University of California for many — for 
two years. Dr. Rider would not accept anybody that does not 
measure up to the highest standards. 

I think that's about all I have to say. 

SENATOR LEWIS: Thank you very much, gentlemen. 
Could you free up those seats? 

DR. RIDER: We have some other people. 

SENATOR LEWIS: Yes, if you'll make way. 


DR. BONILLA: I appreciate this opportunity. I am 
Luis Bonilla. 

I graduated from the University of El Salvador, 
and thanks to the program that Dr. Rider had, I was able to 
obtain my medical license. 

I am practicing general medicine, and I am in two 
hospitals in San Francisco, St. Luke's and Seaton Hospital. 

And it was mentioned that in order to protect the 
community, these programs should be abolished. And I consider 
that this is a big mistake, because my community, the Hispanic, 


they feel underserved because nobody of the physicians, you 
know, I cannot generalize, but a lot of physicians, they don't 
want to serve a community that doesn't have insurance, a 
community that has Medi-Cal, because the Medi-Cal pay is low. 

And there was another thing that was mentioned, 
that we pay to be in the program. And that's completely false. 
I was paid to be in the program. 

And there was also mentioned about what is the 
characteristic of the program. The program is made by the 
characteristic of the director. And I consider that Dr. Rider 
is very demanding, capable, and intelligent. And let me tell 
you, it has been my best mentor. 

And that's why, when I obtained my medical 
license in 1988, I went to private practice because I felt 
confident. And anybody can keep track of my record, you know. 
They can do it easily. 

So, that's the only that I have to say. 

SENATOR LEWIS: Thank you very much. 


DR. RIDER: Can we have a few more from my 
program first? I'd like to have those who finished my program, 
then he can present his program. They're just very quick. Just 
identify who they are. 

SENATOR LEWIS: All right, why don't you do that; 
just identify yourself. If you have something else that hasn't 
be said already, please say it briefly. 

DR. BRADLEY: Yes. I'm Scott Bradley I practice 
in a rural area in central California, where I prominently have 


an Hispanic population. I'm bilingual. 

One thing that wasn't clear, and I won't go over 
the points that were elaborated on, but one thing that wasn't 
clear is that to go through this program, you have to have 
license to practice from the country you came from. 

I'm obviously from the United States. I grew up 
In Marin County. But I graduated from the University of Talama, 
Guadalajara. I completed the requirements for internship at 
University of Talama Nacional in Mexico City, and I completed a 
one year of social service in Mexico City, the requirements for 
that . 

After completing that, I still had to wait to get 
my license, pass the Mexican Medical Boards, and have an actual 
license to practice. 

So, these are not medical school graduates who 
enter this program. These are physicians who have a license to 
practice from the country they came from. I'm sure in the past, 
there were varying standards, but the standards now in most of 
Latin America are very, very high. 

And I feel that this isn't a two-tiered system at 
all. Rather, the bar was probably raised. And I did a little 
bit more; I was required more of me than the usual programs. 

SENATOR LEWIS: Thank you. 

Next . 

SENATOR KNIGHT: Before they get here, 
Mr. Chairman, can I ask a dumb question? 

What defines this 1324 Program? 

DR. JOAS: In the California Code of Regulations, 


the 1324 Program had specific requirements. The hospital had to 
have Joint Commission approval. It was in a community hospital. 
The medical director of the program had to have some degree of 
capability of directing the program. 

It was meant, in my interpretation of it, was 
meant as a remedial program for international medical graduates 
to spruce up their capabilities in the State of California so 
that they could then take whatever licensing exams were 
necessary to be licensed in the State of California. 

SENATOR KNIGHT: Then the question is, what 
precludes them from doing that same thing without Section 1324? 

DR. JOAS: Nothing. 


DR. RIDER: To answer, they can't get in any 
other program. 

SENATOR KNIGHT: I thought you said they 
immigrated. I thought they had already immigrated to this 

DR. RIDER: They're here, but they got to get a 
one-year program in the State of California. 

SENATOR LEWIS: Next, please. 

DR. TRAPALEIS: I'm Andrew Trapaleis. 

I'd like to support Dr. Rider's program. I'm one 
also of the — I don't know how I should say — a foreign 
graduate. I was an American who started in a foreign 
university, who came back to get the licensure, and I was unable 

If it wasn't for Dr. Rider's program, which I did 


a fellowship in gastroenterology, then went on to do an 
internship over at St. Mary's Hospital in San Francisco, I would 
not have been able to practice medicine here in California. 

Presently, I have an office in Jackson, an 
underserved nation — town, I should say -- and I guess that 
maybe 80 percent of my practice is Medi-Cal, mainly because all 
the physicians are Latin or do not want to see the Medi-Cal, as 
another physician mentioned here a little earlier, because of 
the low pay. 

And if you like, now, I think there is a 
confusion as far as this physicians going back to their nations 
because they got trained here. That has nothing to do with it. 
I think we're confusing foreign graduates versus foreigners, 

This is American students that went to a foreign 
country and came back. It's one bill, and the other bill is 
the foreign doctors who came here, who immigrated here, and will 
stay here. Most of them, and the majority in Dr. Rider's 
program ended up going to family practice or general medicine, 
and who have gone to small towns, as mine up in Jackson. 

We have another two doctors here . One ' s up in 
once Placerville, where again, about 75 percent of the patients 
are Medi-Cal. 

SENATOR LEWIS: Thank you. 

We're going to devote five more minutes to 
opposition, and that'll be it. 

DR. RIDER: One lady here. We haven't had a lady 


DR. SOMMA: I'm Dr. Somma, Elena, from 
Argentina. Graduated from the University of Buenos Aires, and 
practices medicine in Argentina for many years, and then come up 

And thanks to the program, I will be able to 
fulfill the licensing here. I completed all the examinations, 
and after I have been done with this. Dr. Rider was able to 
admit me. And thanks to him, I am what I am. 

And I can tell you, he is not mild. I almost 
cried with him, so I be able to be a physician here thanks to 

DR. RIDER: That's our case. 


DR. RIDER: He's from Southern California. 

DR. ZARRINPAR: Only briefly, I want to defend 
from foreign graduate. 

My name is David, and my last name is Zarrinpar. 
I am graduated from Persia. I'm an American citizen here. So, 
I am an American citizen, sir. 

And regarding that, the numbers that they are 
telling that there is more consumer numbers, that they are 
differences, because we, as primary care, we are taking care of 
some people, a lot of the number. 

It reminds me, my teacher told me, how many times 
you have perforated your uterus when you do the curettage. I 
said nothing. He said, so. You have nothing to do. You had not 
enough number . 

So, regarding that, as we see more patients, we 


have more complications. So regarding that, maybe number is 
right, but regarding the service we are giving to the people. 

Another thing that I want to tell, that we are 
passing all the boards, and that we are qualified to be accepted 
to accredited programs. I heard Dr. Joas say there is 200 open 
programs. Even right now, there isn't a situation for me, even 
after three years licensed doctor, even I am very — with 
pleasure to go taking that program if they offer me to go, to be 
working at that program. 

So, I believe that the solution for that, it is 
the raising the conditions of this hospital that teach the 
people as level as they wanted. It is not the closing that 
place. I believe that it is not very good decision to close 
this situation. 

SENATOR LEWIS: Thank you very much. 

That concludes the testimony. 


SENATOR LEWIS: Senator Knight moves 
confirmation. Please call the roll. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 



SECRETARY WEBB: Lewis Aye. Four to zero. 
SENATOR LEWIS: Congratulations. 
DR. JOAS: Thank you. 
[Thereupon this portion of the 
Senate Rules Committee hearing was 
terminated at approximately 4:15 P.M.] 
--ooOoo — 



I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 

//•^ day of 004^ 

, 1998. 



Additional copies of this publication nnay be purchased for $4.25 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

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Please include Stock Number 355-R when ordering. 





i~. ■ ■ 

MAY 27 1998 


ROOM 113 


MONDAY, MAY 18, 1998 
1:33 P.M. 





ROOM 113 


MONDAY, MAY 18, 1998 
1:33 P.M. 

Reported by 

Evelyn J. Mizak 
Shorthand Reporter 










GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NANCY MICHEL, Consultant on Governor's Appointments 





Department of Developmental Services 


Association of Regional Center Agencies 


California Rehabilitation Association 


Division of Labor Standards Enforcement 



California State Council of Carpenters 


California State Council of Laborers 


Southern California Labor Management 

Operating Engineers Contract Compliance 



SEIU Paramutuel Clerks 


United Garment Workers Union 

BOB REED, Sewing Contractor 

Stitches, Incorporated 

Garment Contractors Association of Southern California 

ACAC, Apparel Contractors Alliance in California 

American-Chinese Garment Contractors Association 

Korean Garment Industry Association 

Northern California Chinese Garment Contractors Association 

Operating Engineers 

Department of Boating and Waterways 


Los Angeles County Lifeguard Association 


Department of Employment Development 



Proceedings 1 

Governor's Appointees; 


Department of Developmental Services 1 

Opening Statement 1 

Questions by CHAIRMAN BURTON re: 

Moving People from Regional Centers 

into Communities 1 

Increased Funding in Budget for 

Regional Center Operations 3 

Level of Compensation for Day Care 

Providers 4 

Questions by SENATOR HUGHES re: 

Opinion of Critical Report by HCFA 5 

Hopeful for Renewal of Federal Waiver 6 

How Department Proposes to Tie Together 

Training and Increased Wages 7 

Trend in Community Placements vs. 

Developmental Centers 8 

Possibility of Closing Any of State's 

Five Developmental Centers 8 

Motion to Confirm 9 

Witnesses in Support; 


Association of Regional Center Agencies 9 


California Rehabilitation Association 10 

Committee Action 11 


Division of Labor Standards Enforcement 11 

Introduction and Support by 


Background and Experience 13 

Questions by CHAIRMAN BURTON re: 

Denial of Licenses to Certain 

Garment Contractors Due to 

Noncompliance with Back Payroll 

Tax Filings and Payments 15 

Criticism that Division Is Slow 

to Act, Misses Statutory Deadlines, 

Lax in Enforcement 16 

Questions by SENATOR HUGHES re: 

Would Budget Augmentation Help 

Improve Enforcement and Effectiveness 17 

Criticism by Legislative Analyst that 

Penalties Were Never Collected 17 

Forceful Advocacy for Staffing 

Needs of Division 18 

Case of James Sanzaro . Where Enforcement 

and Collection Powers Were Not 

Utilized 18 

Position on Retention of Existing 

Method for Determining Prevailing Wages 20 

Actions Proposed to Enforce Existing 

Prevailing Wages in Public Works Projects 20 

Ruling Relating to Employer 

Discrimination on Sexual Orientation 21 

Motion to Confirm 22 

Witnesses in Support: 


California State Council of Carpenters 22 


California State Council of Laborers 22 



SEIU Parimutuel Clerks 23 


United Garment Workers Union 23 

BOB REED, Sewing Contractor 

Stitches, Incorporated, Los Angeles 

Various Garment Contractor Associations 23 


Operating Engineers 24 

Committee Action 25 


Department of Boating and Waterways 25 

Background and Experience 25 

Questions by CHAIRMAN BURTON re: 

Intentions regarding MTBE 27 

Authority to Prohibit Two-stroke 

Engines on Waterways 29 

Lack of Regulatory Authority 30 

Position on DEBRA BOWEN Bill 30 

Motion to Confirm 30 

Witness in Support: 


Los Angeles County Lifeguard Association 31 

Committee Action 32 


Department of Employment Development 32 

Background and Experience 32 

Questions by CHAIRMAN BURTON re: 

Project 2000 33 

Motion to Confirm 35 


Questions by SENATOR HUGHES re: 

Role of EDD in Implementation of 

Welfare Reform in California 35 

Adequacy of Maximum Weekly 

SDI Benefit 36 

Screening of SDI Applicants for 

Citizenship 36 

Informing Claimants of New Telephone 

Filing for UI and SDI Benefits 37 

Availability of Staff to Help 

Those Needing Assistance 38 

Questions by SENATOR AYALA re: 

Reimbursement of Benefits Paid by 

Undocumented Workers 39 

Reporting of Undocumented Workers 

to INS 41 

Penalties against Employers Hiring 

Undocumented Workers 42 

Questions by CHAIRMAN BURTON re: 

Department's Support for Bill Increasing 
Disability Insurance 43 

Possibility of Reducing Rate 

Due to Surplus in Fund 44 

Committee Action 46 

Termination of Proceedings 46 

Certificate of Reporter 47 


— ooOoo — 
CHAIRMAN BURTON: Cliff Allenby, good afternoon, 

MR. ALLENBY: Good morning, good afternoon. 

CHAIRMAN BURTON: Director of Developmental 


Mr. Chair and Members, Cliff Allenby, appointee 
for the Department of Developmental Services. 

Do you want an opening statement? 

CHAIRMAN BURTON: Whatever you want to do. 
You're kind of new here. 

MR. ALLENBY: I was appointed at the end of 
November as the Department Director. And obviously, my plans 
are to stay through the current administration, and then go out 
and look for work beginning in January of '99. 

CHAIRMAN BURTON: How do you view the concern 
people have about moving people from the centers into the 
community? How do you balance what is a tough situation to get 
people back in the community, but, on the other hand, make the 
ones that can't function in the community, that we don't get 
into with the DDs what we did with the mentally ill in the '70s? 

MR. ALLENBY: One of my goals is to try to have 
the folks that are part of the system really think of it as a 
system, not developmental centers with their own constituency 
group, and then the regional centers with their own constituency 
group . 

What I believe we should have is, we should have 
a swinging door, but the door should go both ways. 

We had a court settlement, the so-called Coffelt 
decision, and the net effect of that was to severely reduce the 
number of intakes to the developmental center system, because 
the system had fairly close to the same number of people leaving 
the DCs into the community. 

But what has happened as a result of the Coffelt 
is that there have been just an absolute almost drying up of 
people going back into the system. 

I think that the system, the developmental center 
system, has some real attributes. My view is that it should be 
used more frequently for our clients in the community who have 
difficulties and may need to go back into the developmental 
system, developmental center system, for some period of time for 
stabilization. Then, if they prove that they can go back out 
into the community, ' because the intent of the system is to do 
the least restrictive environment, that clearly is in the 
regional center system. 

But my hope is that we can improve and engender 
some trust an amongst the various parties. That's easier said 
than done because there's a long history. 

CHAIRMAN BURTON: You've got a tough road, as you 
know. I've known Denny Amundson for many years, when he was 
with Uncle Frank Lanterman. I can't tell you how much I got 
beat up saying nice thing about Denny. Not defending him, just 
saying nice things. 

One of the concerns was that, again, maybe it was 

a cost saving thing, or because I go back to what happened with 
the mentally ill in the '70s, is that there was a timeframe 
under Coffelt. They were, like, way ahead of the curve. I 
think that that was a concern. 

One of the concerns that happens is when, in 
theory, at least in the press, is that a lot of these people get 
back in the community, and the Department had no idea where they 
were. In other words, to be able to follow up and know where 
they are, and kind of have more of a control mechanism. 

I think you know what all the problems, some 
real, some imaginative, imagined, but when we're dealing with 
parents, or loved ones, or even friends of people with 
disabilities, what may not be real, but if it's real in their 
mind, it's a real problem, I think, for those of us who 
represent them in office, and then for you. 

Now, we've increased funding. The budget's got 
increased funding for the regional center operations. What role 
can you play or will you play to see that some of this money 
gets passed? That money that's meant to bring some of the 
employees up to a level where they should be? 

MR. ALLENBY: We have — the budget in January 
proposed a number of improvements to the regional center system 
to improve case management, also to give — reflect the fact 
that the salaries of the personnel at the regional centers have 
not kept up with other changes occurring. 

In the May revision, we proposed a number of cost 
of living adjustments for the actual providers. And there's 
language to ensure that at least a part of that go directly to 

salaries. Some of it's tried to training. If you go, have a 
certain amount of training, then there'll be an automatic ten 
percent boost to your salary. And then occur in the following 
year, you can get another ten percent boost. 

I think that part of the problem, and it was 
Denny's problem, and it was very difficult, was that during the 
time when we had the budget crunch, there were a number of 
reductions to the budget in both regional centers and the 
developmental centers. And there was a lot of stress and strain 
as a result of that. 

And what we're doing now is getting some of that 
loss back. And I think the system will be better served because 
of that. 

CHAIRMAN BURTON: Just one. I'm trying to 
remember, the daycare providers came in to see me. They were 
concerned about the level of compensation, and they had a level 
that was way up. 

Do you have any plans to do something there? 

MR. ALLENBY: We have a proposal in the budget. 
What we're statutorily required to do is to publish each year 
the gap between what we're paying them and their cost. And 
there is sufficient money to fund the gap. 

There ' s another area where we have day programs 
that have been in existence for a long time that are really 
being substantially getting much lower reimbursement than other 
day programs providing for like programs. So, we're adding 
funds to bring them up to the lower limit. There are about 150 
day programs that will receive an additional increase beyond the 

amount to fund the gap. 

We're also asking that the system be — that we 
relook at the total system, because clearly it has not worked. 
We've had the substantial spread from high to low. We believe 
that we need to bring them together, and we also believe we need 
to have performance and outcome measures really be the 
determiner of what the program worth is. 

CHAIRMAN BURTON: Members of the Committee? 
Senator Hughes, do you have something? 


Thank you very much for appearing before us 

I understand that HCFA had a preliminary report 
that was really critical of your Department. They included such 
findings as the fact that you had unsafe conditions in some 
community care facilities, and there was a denial of human 
dignity and the opportunity to participate in community 
activities. And there were serious deficiencies in the state's 
community care licensing process, and inadequate access to 
certain services, such as appropriate dental and behavioral 
health services. And severe concerns about the lack of 
financial and programmatic oversight by the Department of Health 
Services, especially of the DDS and the regional centers. 

Is that still the situation? What should we 
think of that report? 

MR. ALLENBY: Well, Senator Hughes, we had two 
ways of dealing with the HCFA report. One was to argue that a 
sample size of 91 to make the kinds of conclusions they did. 

when we had almost 40,000 folks, was maybe problematic. 

But on the other hand, while we didn't agree with 
all the findings, we did agree that there were significant 
problems in the system. And that we have been working with HCFA 
since the report came out. 

They are just completing a survey this month, a 
re-survey of what's occurred since we started this whole 

We believe that the problems that were out there, 
and there were problems, are being resolved. And we do believe 
that we'll have a better system as a result of the HCFA report. 

The proof of the pudding will be whether we get a 
renewal of our waiver. The current waiver ends the end of June 
of this year. We are, as of this moment, hopeful that we will. 

SENATOR HUGHES: You're what at this moment? 

MR. ALLENBY: Hopeful that we will get a renewal 
of the waiver. 

The problem we have is that a number of things 
and improvements that we are calling for are included in our 
proposed budget. Now, under the Constitution, the budget's 
supposed to be finished by the end of June. And if it is, then 
I think we will be fine, because as of now, the subcommittees 
that have reviewed our budget have approved 95 percent of our 
proposals, or maybe even a little bit more. 

We're not sure what '11 happen if the budget is in 
kind of a hiatus of July-August. Hopefully, we can convince the 
federal government that even though the budget is not signed, 
that the administration supports all of the changes that we're 


So, as of now, we're hopeful that we'll get a 
five-year waiver renewal. 

SENATOR HUGHES: I'd like for you to give us a 
little insight. 

How does your Department propose to tie together 
the training and the increased wages? 

MR. ALLENBY: All right. 

We have a proposal in our community care 
facilities where we will put together a training program that 
will be given to the workers. The workers complete the training 
program, which is approximately 35-37 hours. They will receive 
a ten percent increase in their salary. 

In year two, we're offering another 35 to 37 hour 
training program. If they complete the training program, they 
will receive a ten percent — an additional ten percent increase 
in their salaries. 

What we're trying to do, and what it looks now 
like we will be able to do, we'll be able to use the RQP 
community college system that will basically be the ones that 
are providing the training, which does mean that they'll be able 
to get credit for the training, which is very important to a 
number of our provider — a large portion of our provider 

So, we feel that we have a program that will 
begin to give some recognition to the fact that these folks have 
very difficult clients to deal with and should be properly 
compensated for providing very needed services. 


SENATOR HUGHES: So then, do you see the trend 
the community placements over placements in the developmental 
centers continuing? 

MR. ALLENBY: It has been the case for a number 
of years, beyond just the Cof felt years. We've had substantial 
transfers from within the developmental centers out to the 

What has not happened over the past four or five 
years is that there's not been any inflow into the developmental 
center system. As I said earlier, I believe the door should go 
both ways. If there are clients in the community that need a 
very strong medical model, which is what the developmental 
centers are, then they should be able to go to those centers. 
And the regional centers really should have a good working 
relationship with the various developmental centers. 

There will continue to be movement out, but I 
think at some point in time, we'll have to look, in areas where 
it's truly needed, there's some movement in. 

SENATOR HUGHES: Do you think that if this kind 
of trend continues, do you see the foreclosure of any of the 
state's five developmental centers any time in the near future? 

MR. ALLENBY: No, I don't. I think, I mean, if 
you look at budget for this year in our May revision, we 
actually asked for an augmentation because the number of clients 
in the DC that we estimated in January, if the amount we're 
assuming for '98- '99 is actually higher. 

I don't see closures. What I do see at some 
point in time is that the Legislature and the administration are 

going to have to look to how we really do provide a medical 
model. We're now looking at the condition of our developmental 
centers, and what it would take to bring them up to current 
codes. And it does represent a lot of money, a lot of money. 

So, we're going to have to look at whether we 
keep the regional centers in the way they are, or whether we 
basically establish maybe smaller, more geographically 
distributed, or just what. 

Since I'm not going to be here to make that 
decision, I can't tell you what will really happen. But I think 
that that really is going to be a policy issue that you folks 
are going to have to be dealing with over the next year or two, 
to figure out whether you really should put the money into the 
current system or reform it. 

We're going to be spending a lot of time trying 
to give you the kind of information you'll need to make a good 
decision in terms of what to do next. 


CHAIRMAN BURTON: Any further questions. Members 
of the Committee? 

SENATOR LEWIS: Move confirmation. 

CHAIRMAN BURTON: Moved by Senator Lewis. Call 
the roll. 

Anybody opposed? Those in support, give a little 

MR. ROLLENS: Rick Rollens, representing the 
Association of Regional Center Agencies serving the needs of the 
146,000 people in California with developmental disabilities. 


We're here in strong support of Cliff Allenby for 
Director of this Department. Hard working, conscientious, and 
bringing a real breath of fresh air to that department. 

We strongly support his confirmation. 

CHAIRMAN BURTON: Other support? 

MR. HANSEN: Mr. President, Members, Dwight 
Hansen, representing the California Rehabilitation Association. 
We represent 110 private community-based nonprofits that do the 
day programs that Senator Burton referred to earlier. 

We strongly support Cliff Allenby' s confirmation 
today. He is, in fact, qualified beyond measure to serve in 
this position. 

That doesn't mean, however, that we're totally 
satisfied with the May revision. In fact, the funding that the 
administration has put forward for day programs is held up, 
potentially, for as much as a year or a year-and-a-half . The 
issue that that raises for Cliff, of course, is that he may not 
have the resources necessary to administer this important 
Department in the way that he's capable of. 

Notwithstanding our concerns about May revise, we 
absolutely applaud Cliff's appointment and recommend his 

CHAIRMAN BURTON: Any opposition? 

Call the roll. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 



SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Senator Burton. 


SECRETARY WEBB: Burton Aye. Five to zero. 

CHAIRMAN BURTON: Congratulations, Cliff. 

MR. ALLENBY: Thank you. 

[Thereupon the Committee acted 
upon legislative agenda items.] 

CHAIRM7\N BURTON: Jose Millan, Chief, Division of 
Labor Standards Enforcement. 

SENATOR COSTA: Thank you very much, 
Mr. Chairman, Members of the Committee. 

I'm here to introduce and support the 
confirmation for Jose Millan as California's new Chief, Division 
of Labor Standards Enforcement. 

I first met Mr. Millan over six years ago in a 
program that dealt with targeted industries, partnership 
program, primarily focusing at a lot of the garment workers in 
Southern California and farmworkers in various parts of the 
state, to try to target those specific industries to improve 
their ability to enforce labor standards. 

And as you might expect, that entire program was 
somewhat controversial. But throughout that effort, I think, 
the industries that were targeted after the program did a better 


job, frankly, in maintaining and enforcing labor standards for 
those workers. And we were able, I think, as a result of that 
to clean up some of the bad actors who, in fact, were not doing 

In that entire effort, and we weren't always in 
agreement, Mr. Millan and myself, I will tell the Members of 
this Senate Rules Committee that I found his ability to work 
with diverse interests to be remarkable. And while we did not 
always agree, he was the type of individual that was hands-on in 
his approach. He would come to the meetings. He'd get out into 
the fields. 

His bilingual capabilities, I think, made him 
very well informed, and more importantly, able to communicate to 
the various employees what standards and what protections under 
the law they had available to them. He understands the 
vulnerability, I think, of workers in many of our industries. 
He's always attempted to be fair, impartial, in the enforcement 
of labor laws in California, an effort that he has dedicated 13 
years of his life to. 

I think his technical knowledge of labor issues 
as Labor Commissioner intends to inspire confidence in those who 
work with him and those with employers and employees alike. 

I have no hesitation whatsoever in recommending 
him to serve as the Labor Commissioner, and would ask for the 
support of the Senate Rules Committee. 

CHAIRMAN BURTON: Thank you. Senator Costa. 

MR. MILLAN: Thank you. Senator Costa, very 


Mr. Chairman and Members of the Senate Rules 
Committee/ my name is Jose Millan, and I come before you today 
as the designate for the position of State Labor Commissioner 
and Chief of the Division of Labor Standards Enforcement. 

Inasmuch as I think you can get a better idea of 
a person by understanding where they came from, let me begin by 
telling you a little bit about my background. 

I was born and raised in a loving but poor home 
in East Los Angeles. Since both my parents worked in order to 
support me and my six brothers and sisters, I was left pretty 
much on my own to complete homework assignments and the like. 
But these experiences taught me to become self-reliant as well 
as responsible. 

I became the first member of my family to attend 
college, Claremont College, and for that I'm very proud, because 
I've always felt that a college education is like a key that 
would open doors that would otherwise be closed to me. 

Wishing to continue my education, but wanting to 
experience life outside of California, I went to graduate school 
in Vermont and law school in Texas. And I learned from these 
experiences that there's no place like home, in my case that's 

After completing my education, I began my career 
in the field of labor law enforcement with the Agricultural 
Labor Relations Board. There I gained a reputation with both 
the unions and management as being tough but fair, and putting 
enforcement of the law above everything else. 

I think that every Labor Commissioner comes to 


the job with a pre-set idea of what could be done. In that, I'm 
no different. I have many goals, including strengthening and 
expanding our work site inspection and field enforcement 
programs by promoting our partnership programs with other 
agencies, individuals, and organizations so that minimum labor 
standards in the workplace can be vigorously and fairly 

I'd like to stabilize and further improve the 
efficiency of our wage claim adjudication program, modernize our 
licensing program so that it becomes a true indicator of 
competent and responsible employers. 

I'd like to embark on the most ambitious 
educational outreach effort in the Division's history, 
particularly by reaching out to those communities that have been 
overlooked, or ignored, or have been linguistically isolated. 

I intend to reach out to both employers and 
employees, because I believe that promoting compliance with the 
laws and reaching out to these communities is of paramount 
importance. Prevention is the most effective, cost effective, 
form of enforcement. 

And in closing, I just want to say that while I 
realize that the challenges ahead are daunting, I do have faith 
in my abilities and my 13 years with the Agency enforcing these 
laws. I do have faith in God, and with the help of the people I 
work with, I'm confident I will do a job that all Californians 
can be proud of. 

I'd be glad to answer any of the questions you 
may have. 


CHAIRMAN BURTON: There is one question that 
Senator Polanco expressed a concern, where recently you were 
going to deny licenses to some garment contractors because they 
were failing to keep up to date their unemployment insurance 

Do you ever any idea what I'm talking about? 

MR. MILLAN: Yes, sir. 

One of the methods by which we determine, as I 
said, one of the things that I want to do is strengthen our 
licensing program so that it becomes a true indicator of 
competent, responsible employers. 

One of the ways that we do that is, we screen 
applicants for both garment registration, as well as farm labor 
contractor licenses, as well as the talent agent licenses for 
compliance with back payroll taxes, because we feel that there's 
a nexus there between your history of paying your payroll taxes 
and your competency as an employer. 

So, we do have about 200 garment manufacturers 
who have applied for a license with us that have completely 
ignored prior back tax assessments for payroll taxes. And we 
did not feel that that was a good indicator of their competence 
to carry on a business. 

But we are working with the garment contractor 
associations in order to reach these people one more time and 
get them into compliance with these laws. 

CHAIRMAN BURTON: So, in effect, you would give 
them the opportunity to get into compliance? 

MR. MILLAN: Absolutely, absolutely. 


CHAIRMAN BURTON: Couple other questions. 

You may familiar with this, but a year ago, over 
a year ago, in the L.A. Times, they were talking about the labor 
office being slow to act, and basically about missing statutory 
deadlines for processing claims. There were not enough services 
that the workers could understand what was going on. That even 
when the cases were decided, a long time could drag on before 
they got the wages. I guess this is your enforcement power. 

There are problems in ag. and garment, but 
there's also problems in construction, building service, which 
would be janitors and security guards, as well as service 
personnel in the craft industries, according to the Department 
of Labor. 

So, basically, how are you going to deal with the 
fact that they've been a little lax in recent years? What do 
you need? More money, less money? More people, less people? 
Just somebody on top who wants to get the job done? What are 
you going to do? 

MR. MILLAN: Let me tell you what things I have 
done, what things are being proposed. 

When I was appointed in July of '98, I 
immediately expressed an interest in opening up the Los Angeles 
district office. I think that was one of the major complaints 
in that article, that the residents of the City of Los Angeles 
did not have a forum to bring their wage claims, and they had to 
go Van Nuys or Long Beach, our other two offices. So, I opened 
up the Los Angeles office to accept wage claims and process them 


As I alluded to earlier, we have embarked on a 
very ambitious educational outreach program by having these 
materials provided in the language of the individuals, 
non-English speaking individuals. 

And just in closing, I want to say that the 
Governor has proposed in his budget an augmentation for our 
field enforcement programs, and I strongly support that 
augmentation, and I would hope that all of you would as well. 

CHAIRMAN BURTON: Senator Hughes. 

SENATOR HUGHES: Do you think by the budget 
augmentation that that would substantially help you to improve 
the enforcement and the effectiveness of this Division? 

MR. MILLAN: Absolutely, I think that that would 
be the case, because, as you're probably aware, Senator Hughes, 
having a presence in the workplace and being able to respond to 
complaints within a short timeframe, once the complaints are 
filed, really helps us to identify problems, or even prevent 
other problems, and just reinforces the confidence that the 
employees have in an enforcement program. 

SENATOR HUGHES: Now, I understand Leg. Analyst 
has criticized your Division, stating that most of the penalties 
that were assessed were never collected. 

Are you doing anything about the collection, or 
do you think that we should be further pursuing that? 

MR. MILLAN: What we've done is, actually it was 
at the suggestion of Senator Polanco some years ago. We turned 
over all of the collections for penalties over to an agency that 
is better equipped, in terms of resources and time and ability. 


to affect collections on debts owed to the state. 

SENATOR HUGHES: What agency is that? 

MR. MILLAN: The Franchise Tax Board. Franchise 
Tax Board now handles all of our collections. 

SENATOR HUGHES: As of when? 

MR. MILLAN: As of 1996. 

And any other way that we can help them, and help 
improve their ability to affect these collections, we will do 

But we do deal with a population, as Senator 
Costa alluded to in his opening statement to present me, we do 
deal with a population of employers who are in violation of many 
laws. And therefore, they're quite adept at trying to hide, or 
they have no assets in many cases. Open up a shop one day, 
close it down the next. There are no assets to attach 

SENATOR HUGHES: This is a self-perception 
question. Do you believe that you are, in fact, a forceful 
advocate for the staffing needs of your Division? 

MR. MILLAN: Absolutely, absolutely. 

SENATOR HUGHES: And you're doing all that you 
can possibly do under the circumstances? 

MR. MILLAN: Oh, yes, yes. 

SENATOR HUGHES: You were the Deputy Labor 
Commissioner in '86- '87. Can you give us some idea why your 
Division's enforcement and collection powers were not utilized 
in a specific case? There was a James Sanzaro, which case had 
been brought to your attention by the Rules Committee staff. 


Do you know how long the records on 
Mr. Sanzaro's case have been missing or absent from the files? 

MR. MILLAN: We have a deadline of five years in 
our records retention program. So, we looked — actually, when 
this situation came to our attention this year, we looked for 
those records, and those records have been purged because of the 
records retention. 

So, what I've been able to piece together, with 
the assistance of Rodger Dillon, and the Rules Committee, and 
various individuals from my Southern California offices have 
been in contact with Mr. Sanzaro himself. We've been able to 
get the documents together. 

SENATOR HUGHES: What recourse do you think he 
has, since you're still looking and searching for his documents? 

MR. MILLAN: Based on my technical experience in 
working these types of wage claims, I can tell you, I can't hold 
out a lot of hope in resolving the claim, because the statute of 
limitations, unfortunately, has long since expired. Plus, the 
legal entity that he's filed a claim against changed. There's a 
new legal entity now. 

But, I don't want to foreclose any possibility, 
and so I would like to talk with Mr. Sanzaro and have him talk 
with our legal staff to see what, if anything, we can do to see 
that he gets the money that we determined was owed to him. 

SENATOR HUGHES: I'm very proud of your public 
acknowledgement that you are attempting to continue to help him, 
because it's a very difficult situation that he finds himself 


MR. MILLAN: Absolutely. 

SENATOR HUGHES: What is your position on the 
retention of the existing method of determining the prevailing 

MR. MILLAN: Well, I am in the position of being 
the Chief labor law enforcement officer of the State. So, I 
don't really have a position on what the law should be, or could 
be, or would be. I just enforce what the law is. 

And currently, that methodology is the modal rate 
of determining prevailing wages. 

I do believe in statutory rights of workers who 
work on public works projects to be paid a prevailing wage rate, 
and that's what I am to enforce. I enforce what the existing 
law is. 

SENATOR HUGHES: What action do you intend to 
take to increase the enforcement of the existing prevailing 
wages in public works construction? 

MR. MILLAN: I have completely changed over the 
public works enforcement program by changing over to the team 
concept of enforcement, whereby we have investigators working 
along side the payroll auditors, attorneys and clerical help. 
Altogether, by sharing resources and sharing attention to these 
cases, I think the quality of our cases can be vastly improved, 
and has been, and we turn these cases around in a quicker amount 
of time. 

SENATOR HUGHES: The Sacramento Bee reported that 
you had ruled that the laws prohibiting employee discrimination 
based on sexual orientation applied to nonprofit organizations. 


such as Boy Scouts, fraternal organizations, labor unions, 
homeowner associations, et cetera, et cetera. 

Could you explain your ruling relating to 
employer discrimination on sexual orientation? 

MR. MILLAN: That actually required a reading of 
the relevant Labor Code Section 1102.1 that was passed by this 
Legislature and signed by the Governor, as you well know. 
AB 2601 was the relevant law. 

That law specifically exempted a certain class of 
employers. That class of employers is defined in that Labor 
Code section as being employers of five or fewer employees, and 
religious employers, whether they're organized as a nonprofit or 
for-profit, associations or organizations. 

I didn't think — and actually I had relied on 
previous legal counsel opinion, to say that the law extended the 
prohibition to nonprofit organizations some time back when I was 
Assistant Labor Commissioner, based on legal counsel telling me 

But we had a case that I became aware of after my 
appointment from an employee of the San Francisco Employment Law 
Center who was alleging that that reading of the statute clearly 
went beyond what the Legislature intended. And that actually 
the Legislature intended to exempt specifically religious 
nonprofit or for-profit organizations, and no other type of 
organization. Unless you have a religious component, or 
quasi-religious component, you really could not fit under that 
category of exemption. 

So, after discussing it again with legal counsel, 


both internally and externally/ and with the Attorney General's 
Office, we came to the conclusion that, in fact, the Legislature 
intended to exempt this class of employers, religious 
organizations, nonprofits or for-profit, and no other type of 

That's why you had the legislative attempt 
recently by Assemblyman Baldwin to extend the statute to include 
nonprofit, non-religious employers. 


MR. MILLAN: You're welcome, Senator Hughes. 

CHAIRMAN BURTON: Senator Knight. 


In looking over your resume, I can understand 
maybe how you went to Brattleboro, but how in the world did you 
spend two winters in Vermont? 

MR. MILLAN: Actually, it was a good experience. 


MR. MILLAN: One I don't want to repeat any time 


SENATOR LEWIS: Move the confirmation. 

CHAIRMAN BURTON: Any opposition? I know there's 
some support. Why don't the supporters identify themselves for 
the record. 

MR. CURTIN: Mr. Chairman and Members, Danny 
Curtin, California State Council of Carpenters. 

We support the nomination. Thank you. 

MR. CENTER: Mr. Chairman, Chuck Center of the 


California State Council of Laborers. 

We also support the nomination. 

Mr. Chairman and Members of the distinguished 
Committee/ David Lanham, Southern California Labor Management 
Operating Engineers Contract Compliance, support the nomination. 

MR. SANZARO: Mr. Chairman, James Sanzaro that 
had the problem that Senator Hughes talked about. And it's 
being worked for the first time in a lot of years. 

I certainly support and I represent the SEIU 
Parimutuel Clerks. 

MR. TCHAKALIAN: Mr. Chairman, my name is Ed 
Tchakalian. I work with the United Garment Workers Union. 

And I personally know Mr. Jose Millan for many 
years. I support him. 

MR. REED: Good afternoon, Mr. Chairman. My 
name is Bob Reed. I'm a sewing contractor. My company is 
Stitches, Incorporated, in the Los Angeles area. 

I'm here on behalf of myself and my association, 
which is the Garment Contractors Association of Southern 
California, and also on behalf of the ACAC, which is the Apparel 
Contractors Alliance in California, which is comprised of — 
I'm sorry for all the acronyms — the ACGCA, the 
American-Chinese Garment Contractors Association in Los Angeles, 
the KGIA, the Korean Garment Industry Association. And all 
those are from the Los Angeles area. I'm also representing 
NCCGCA, the Northern California Chinese Garment Contractors 

Together we represent approximately 1200 garment 


contractors, employing approximately 75,000 employees who work 
in registered compliant and legitimate factories. Statewide, 
the industry employs about 175, 000 workers in 4500 registered 

On behalf of my company and my association, all 
four members of the Association of the ACAC, I'm here to give 
enthusiastic and unequivocal support for the confirmation of 
Mr. Millan as the next State Labor Commissioner. 

Thank you. 

SENATOR AYALA: Do you represent all these folks? 

MR. REED: Today I do, yes, sir. 

MR. CREMINS: Mr. President, Jim Cremins, just 
representing the Operating Engineers in full support. 



CHAIRMAN BURTON: Moved by Senator Lewis. 

Call the roll. 

SECRETARY WEBB: Senator Ayala. 



SECRETARY WEBB: Senator Hughes. 


SECRETARY WEBB: Hughes Aye. Senator Knight. 


SECRETARY WEBB: Knight Aye. Senator Lewis. 


SECRETARY WEBB: Lewis Aye. Senator Burton. 



SECRETARY WEBB: Burton Aye. Five to zero. 

CHAIRMAN BURTON: Congratulations. 

MR. MILLAN: Thank you very much. 

CHAIRMAN BURTON: Why don't you let Senator 
Polanco know that you're working with the garment people and 
other the people. 

MR. MILLAN: To bring them into compliance. 

CHAIRMAN BURTON: I understand. In other words, 
you're going to give them time to get into compliance. You're 
not going to stiff them. 

MR. MILLAN: Absolutely not. 

CHAIRMAN BURTON: Sounds good to me. 

Charles Raysbrook, Director of Boating and 

MR. RAYSBROOK: Good afternoon, Mr. Chairman, 
Members, staff. 

I'm Chuck Raysbrook, Director of Boating and 

Thank you for the opportunity to make a few 
remarks about my qualifications. I must say that when asked by 
the Governor to take this position in May of last year, it 
didn't take me too long to decide it was something I really 
wanted to do. 

Even before I came to state service in May of 
1992, I feel that I had some qualifications and experience that 
would commend me for this particular job. 

I am the son of a Navy Captain, and his father 
before him was a Captain in the Merchant Marine. Then I was a 


professional Naval officer/ and during my 23 years of Naval 
service, I worked in a variety of positions, all of which had to 
do with the execution of programs/ apart from those periods when 
I was undergoing formal training. I did have some considerable 
responsibilities in management positions. 

In 1992/ I came to work for the Office of Oil 
Spill Prevention and Response. And they were then in the 
process of becoming established and establishing throughout the 
state/ in the ports and harbors, harbor safety committees 
pursuant to legislation that was passed in 1991, California's 
Oil Spill Prevention and Response Act. 

As those committees were being formed, I was 
participating in that process and got to work with those 
committees. All of them were charged with developing harbor 
safety plans. And the committees themselves were comprised of 
various members of the maritime nautical communities in the 
ports . 

One component of those harbor safety plans was 
recreational boating. So, I grew to know the recreational 
boaters through that process, and we also had some considerable 
interrelationship with Coast Guard. 

While I was in the Office of Oil Spill Prevention 
and Response, I did get to work in executing or developing, and 
then finally having signed, three Memoranda of Understanding 
with the United States Coast Guard. 

So, over the five years that I was in state 
service, I did develop some relationships which I think 
qualified me and prepared me for my present position, that's 


representing over 3 million recreational boaters of the State of 

I think that I've had gratifying time in just the 
short year that I've been there. I've developed some good 
working relationships, parlaying upon my prior background and 

The State of California has been very good to me 
and my family, and I look forward to continuing to serve the 
State of California, paying back something that's been offered 
to me. 

May I respond to questions? 

CHAIRMAN BURTON: One of the problems that, I 
guess, is facing you is the MTBE problem on boats. Then that 
stuff gets into the lakes, and it gets into the water, and then 
people get into the hospital, and some into the ground. 

What are you doing about that problem? MTBE is 
something that everybody looked at as effects the air to make 
the air cleaner, but didn't look at the effect of what it's 
doing to the water supply. 

MR. RAYSBROOK: Yes, sir. 

The problem is complex. As Debra Bowen pointed 
out in her committee hearing a few weeks ago, it does require 
careful consideration by those that have to deal with the 

The Department is satisfied that the cognizant 
state agencies that are responsible for human health standards 
and for water and air quality are, in fact, dealing with that 
problem. There are studies that are under way now. 


CHAIRMAN BURTON: Nothing you can do or should 

MR. RAYSBROOK: Oh, yes, sir. 

CHAIRMAN BURTON: What are you doing? 

MR. RAYSBROOK: Yes, sir. 

When I was working at Oil Spill Prevention and 
Response, there was one program there that I'm now anxious to 
synthesize with the Department of Boating and Waterways program, 
and that is Marina Outreach program. 

It has to do basically with marine fueling 
facilities in the marine environment, addressing the problem of 
spills . 

That is one thing that we can do, is take that 
program and adapt it to inland marinas and recreational boating 

CHAIRMAN BURTON: As I understand, this ain't a 
spill. It's not like you can look at a spill, you can see a 
spill . 

SENATOR KNIGHT: Two cycle engines that use oil 
and gas. Part of it spills out. 

MR. RAYSBROOK: That's correct. 

CHAIRMAN BURTON: What are you going to do? 

MR. RAYSBROOK: When it began, as attention being 
focused on MTBE as an issue, I think, has expanded to 
incorporate the two-cycle engines. By their design, they do 
discharge pollutants into the atmosphere. 

A great deal of energy is being expended now by 
the marine manufacturers. 


CHAIRMAN BURTON: What are you going to do? 

MR. RAYSBROOK: Well, sir, we're looking from a 
policy standpoint. We're looking at the granting of loans. And 
where we affiliate with or get associated with communities or 
water districts that would want recreational boating facilities, 
we're examining how those facilities would then accommodate 
two-stroke engines. 

In some instances, water districts and those 
responsible for water management have taken steps. And we don't 
presume that we can intercede or get involved in their 
independent decision-making process, which has been affirmed in 
an amicus brief by the Attorney General's Office, that local 
communities and water managers do have responsibility for 
setting standards. 

CHAIRMAN BURTON: In other words, you're going 
catch to other people? 

MR. RAYSBROOK: No, sir. At the moment, we don't 
have a position on the bill. 

CHAIRMAN BURTON: If you thought what was going 
on was bad, what could you do to stop it, modify it, or 
whatever, on your own hook? 

MR. RAYSBROOK: It is important that we work with 
other agencies, and we're doing that now. 

CHAIRMAN BURTON: What could you do on your own 
hook? Could you say no two-stroke engines? More two stroke 
engines? More eight-stroke engines? Only sail boats? What can 
you say? 

MR. RAYSBROOK: No, sir, we don't have that 


authority to regulate to that degree. 

We have information outreach. We can certainly 
apprise people -- 

CHAIRMAN BURTON: You have no regulatory 

MR. RAYSBROOK: No, sir. We cannot restrict 
boating per se. In fact, our mission is precisely the opposite. 
It's to encourage recreational boating and to develop 
infrastructure in support of recreational boating. 

SO/ it's a difficult position for the Department 
to be in. We do recognize that there are some very legitimate 
concerns. We also recognize that there are over 500,000 boat 
owners in California that could be affected by legislation that 
would prohibit the use of those engines. It is a concern, and 
it's a complicated problem. 

CHAIRMAN BURTON: There's probably a whole bunch 
of people that can be restricted from doing a whole lot of stuff 
if it's found to be harmful. 

What is your position on the Bowen bill? Watch? 
Don't watch? Do nothing? 

MR. RAYSBROOK: Yes, sir. Watch very closely and 
work with the other agencies that are involved in developing 
standards . 

CHAIRMAN BURTON: Anybody else. 


CHAIRMAN BURTON: I guess it's a problem, but 
you're not the guys that deal with it. 

SENATOR KNIGHT: I won't hold it against him that 


he's Navy. 

CHAIRMAN BURTON: How about the fact that he was 
in the embassy in Pretoria. 


CHAIRMAN BURTON: Defense Intelligence. Is that 
an oxymoron? No, Military Intelligence. 

All right, so you've basically got nothing to do 
with that stuff. You can kind of, and you think it's a problem, 
and you're hoping that somebody else will solve it for you. 

MR. RAYSBROOK: Well, we are constrained in what 
we can do, sir. 

CHAIRMAN BURTON: I understand that. 

Okay, moved by Senator Knight. Call the roll. 

Any support, any opposition. 

MR. DAVEY: Thank you, Mr. Chairman. 

Scott Davey, Los Angeles County Lifeguard 
Association, representing 700 lifeguards down in Los Angeles. 

We want to express our strong support for 
Mr. Raysbrook. Mr. Raysbrook's concern — and you talked about 
safety — his concern for safety is very important to our 
organization. And his willingness to work with local agencies 
like ours is very important for boating safety. 


Any other support? 

Moved by Senator Knight. Call the roll. 

SECRETARY WEBB: Senator Ayala. 



Senator Hughes. 


Hughes Aye. Senator Knight. 


Knight Aye. Senator Lewis. 






Senator Burton. 

CHAIRMAN BURTON: Aye. Keep the roll open. 
[Thereafter, SENATOR LEWIS added 
his Aye vote, making the final 
vote 5-0 for confirmation.] 

CHAIRMAN BURTON: Richard Remy, head of EDD. 

Do you want to briefly — 

MR. REMY: Fine, Senator. 

Thank you for the opportunity of being here. I'm 
Ray Remy, the nominee for the position of Director of the 
Employment Development Department. I've served as the nominee 
in that capacity since September of last year. 

I, like Cliff Allenby, look forward to an 
opportunity of serving the remainder of this year, and then 
following other pursuits in the coming next year. 

My background includes service for seven years 
with the League of California Cities, where I worked with local 
government. Enjoyed that experience. I spent some time with 
area-wide planning organizations in Southern California. 

I then had the opportunity of being Chief of 
Staff for Tom Bradley, the Mayor of Los Angeles, and served as 
Deputy Mayor for an eight-year period. Then spent twelve years 
as the President of the Los Angeles Area Chamber of Commerce, 


where I worked with the private sector. 

I also have in my background a tenure at the 
Jefferson Grammar School in the Sunset District in San 

MR. REMY: I did indeed. 

CHAIRMAN BURTON: Who was the principal? 
MR. REMY: I don't remember the principal. I was 
only in the third grade. 

Who was Vice Principal? Miss Peabody. 
Do you know the school hymn? 
Hail/ hail. 
To thee. 
Oh, hail. 

To Jefferson thrice hail. 
In white our colors 
Bright to see 
A sign of strength 
And liberty. 
MR. REMY: I was trying to figure our — 
CHAIRMAN BURTON: I was more impressed with the 
Student Body President of San Rafael High, but Jefferson Grammar 
School, I have no questions. 

I do have one question, though. 
MR. REMY: Yes, Senator. 

CHAIRMAN BURTON: You guys have Project 2000, or 
whatever it is, the computer. 


Are you going to be up to date and ready for 

MR. REMY: We have substantial resources that we 
put into it. It's affectionately known as Y2K, or the year 2000 
compliance. We have several million lines of data that have to 
be coded. We've got substantial funds that have come from the 
federal government. Department of Labor. 

CHAIRMAN BURTON: You're on target? 

MR. REMY: On a weekly basis, and I am advised 
each month that we're meeting all the milestones for being able 
to meet the Y2K requirement. 

CHAIRMAN BURTON: Where did you live? 

MR. REMY: In which place? 


MR. REMY: At 23rd and Judah. 

CHAIRMAN BURTON: By the lumber yard. 

MR. REMY: Well, wasn't that much lumber there. 
We had the streetcars going one way. 

CHAIRMAN BURTON: But there was a lumber yard, 
and an alley. 

I was a year ahead of you. 

MR. REMY: More than that, I think. When did you 
go to St. Anne's? 

CHAIRMAN BURTON: St. Anne's in the fourth grade, 

The guy's got the book on me. 

MR. REMY: That's 'cause we ran into each other 
at the airport. 


CHAIRMAN BURTON: That's right. In fact, 1 told 
you I saw the nun, Sister Mary Damien. She looked great. I 
must have been nine when she was my teacher. 

SENATOR HUGHES: What is this, the Old Boys Club? 

CHAIRM7\N BURTON: Nothing wrong with that. 
Sunset guys. Colonial Creamery, you got it. 

SENATOR KNIGHT: Any opposition? Move it. 

CHAIRMAN BURTON: Senator Hughes. 

SENATOR HUGHES: How are you doing? 

MR. REMY: Just fine. Senator. 

SENATOR HUGHES: I wanted to ask you, what do you 
think the role of EDD should be in the implementation of welfare 
reform in our state? Just so we get it on the record. 

MR. REMY: I have been pleasantly surprised by 
what I've seen in the range of cooperation. 

If I take probably the most difficult county, and 
that's the county from which you come and in which I have 
served, the eight private industry councils have worked together 
in this project better than they have worked together on 
anything. The County Welfare Director, Lynn Baird, I think, has 
done an extraordinary job, and we are very, very close, I think, 
to getting the final approval on the federal plan, which we will 
then be able to release $160 million to the local level to 
assist in the process. 

More importantly, I think, I've been encouraged 
by the commitment I've seen in the private sector. They really 
do believe that they have a responsibility of developing the 
sort of long-term employment in the private sector for the 


long-term welfare recipients. 

I would not say it's a perfect program, but the 
level of cooperation is far better than I would have expected 
coming to this job. And we will continue to work on it. 

SENATOR HUGHES: Do you think the maximum weekly 
SDI benefit of $333 is adequate for an injured California worker 
and his or her family? I mean, how do people live on that 
little bit of money? 

MR. REMY: The question of the level of the SDI, 
and for that matter, there's also questions on UI, is one that I 
think has to be analyzed in terms of the overall cost of living, 
as well as the impact on the private sector. 

The SDI is paid for by the employee, so that's a 
fund they themselves put into. 

Trying to equate where we are in terms of that 
benefit, and where it works with workers comp. is one that we 
are constantly looking at in terms of developing our 
recommendations for the Governor on that position. 

SENATOR HUGHES: The Governor, in Executive 
Order, requires EDD to screen all the applicants for SDI 
benefits for citizenship. Since the state disability is 100 
percent worker paid insurance benefit, do you believe it's fair 
to require a worker to make insurance premium payments, and then 
deny the same person access to insurance benefits? 

How do you reconcile that? 

MR. REMY: The question — this is, of course, 
tied to the federal legislation, the Welfare to Work, or 
Personal Responsibility legislation, as to the determination of 


what is a state benefit. 

The question then revolves around if someone here 
is working but is not legally in this country, to what extent is 
there a claim that they can make upon a program, which, if they 
were identified as not legally being in the country, they would 
not be entitled to. 

So, when one puts forth a request for a benefit, 
and then at the same time discloses that they're not legally 
here, it raises the question on what basis should they have been 
employed in the first instance. 

That's the legal question that will revolve 
around it as we move forward, ultimately implementing that 
program, however it's defined federally and state. 

SENATOR HUGHES: On to another problem. EDD is 
in the process of introducing statewide telephone filing for UI 
and SDI benefits. 

Since not all the applicants do, in fact, have 
access to telephones, EDD has plans to dedicate at least one 
phone in each of the job services sites for claimants who need 
access to the telephone claim filing system. 

How will the claimant be made aware of this 
service? Because, I had a problem in a portion of my district 
where they closed an office, and they indicated that the phone 
contact would be available. 

And how do you plan on advertising so the people 
who don't have the phones know where the phones can be utilized 
by them? 

MR. REMY: I appreciate the question. Senator, 


because it gets to the heart of a whole set of questions. 

As we move forward to better communication, 
better use of technology, in meeting the needs of a population 
that's now 32 million, and soon to grow to 50-odd million in the 
state near 2025, we have to have the capability of using that 
technology, but we still have to have an understanding of an 
outreach to communities in both urban and rural areas. 

Ways in which we have to do a better job, I 
think, in getting information out to our communities, we're 
going to see more and more of the one-stop coordinated job 
centers, but we need to make sure that people know they have 
access to it. We need to work more with our welfare departments 
to make sure that we can use them as accessibility points for 
people who may not have access in their own homes to what we 
take for granted capability. 

SENATOR HUGHES: But then are you going to 
appoint some field staff to be available to help people who heed 

You know, people are fearful of using telephones 
for anything. Let me share with you an example. 

I called our Arrowhead Water distributor the 
other day for my mother. And then it says, "If you would have 
your number, your account number, press two; if you don't have 
your account number, press three." 

Is it going to be one of those kind of things 
that drive you crazy, and you have to press about six or seven 
numbers before you get an answer? Or are you going to have 
someone there to really allay people's apprehension for using 


the phones? 

These automated things drive most people crazy. 

MR. REMY: I've heard that, and we continue to 
hear it, not only in terms of our service, but in terms of the 
general private sector service. 

I've been very interested in trying to see if we 
can do more in the community outreach side to identify people 
who will be available, not to deal with the individual claims, 
but to deal with the community relations information standards. 

And obviously, the one-stop approach is one area 
of that, but I think we have to do it within our own EDD 

We've got a pilot program that we've worked 
together a little with Senator Thompson in Eureka to see if we 
can do a pilot program there about community outreach to answer 
questions for DI, UI, and other EDD services. 

If it works, we're going to probably try arid 
expand that to other parts of the state to get that community 
presence, at the same time, we're going towards automation. 

CHAIRMAN BURTON: Senator Ayala. 

SENATOR AYALA: Mr. Remy, I could call you Ray, 
but I'm not from San Francisco, so I'm going to call you Mr. 

I want to follow up on Senator Hughes' question 
about benefits that are not paid to undocumented workers who pay 
into the system. I don't think they're entitled to the benefit, 
but the point is, you take money from these people. 

Do you reimburse them with interest? I know I 


would expect you to. 

MR. REMY: That's a question that I think the 
legal staff is going to have to answer as to what is the 
inherent liability of the state upon collecting dollars from an 
employee who is not legally here. 

CHAIRMAN BURTON: The question was, do you give 
them the money back? 

MR. REMY: That's it. 

CHAIRMAN BURTON: You don't know if you do or not? 

MR. REMY: I think the lawyers are going to have 
to indicate -- 

CHAIRMAN BURTON: You'd know whether you give 
them money back or not. 

MR. REMY: As of now, if a person was here 
illegally, they would not get their money back. 

CHAIRMAN BURTON: Their money that they gave you? 

MR. REMY: That's correct. 

But I think that that will be subject to legal 

SENATOR AYALA: I think that common sense tells 
you — never mind this legal mumbo- jumbo — you tax me for 
something that I'm not going to get services from, that's 
taxation without representation. 

MR. REMY: I agree. 

SENATOR AYALA: I agree, these people should not 
be entitled to it, but why do you take their money? 

What do you do with the employers, by the way? 
Here's where we're going to get to a little bit of a problem. 


They hire these people who know they're illegal here, yet, they 
get away with murder. You penalize the people who are here 

I think the employers ought to be given a good, 
stiff fine because they're doing it intentionally, and they know 
they can get away with it, because apparently the law supports 

I would like to see a little fairness involved 
here. Don't get benefits, but you don't pay for them. Instead 
of paying for something, and then you find out you're not 
entitled to it, but you don't get your money back. 

I think it's irresponsible as all get-out, to be 
frank would you. And I don't care what the Democratic or 
Republican administration does, it's wrong. 

And let these employers gets away with murder, 
because they're ones that cause the problem. They hire these 
people, knowing they're Illegal. But we seem to forget about 
those people who are there. 

When the Department identifies an undocumented 
worker, is that individual reported to the INS? 

If they're found to be here illegally, what 
happens to them? 

MR. REMY: If somebody filed a claim, and they 
were not legally here, then I think that information would be 
made available, yes. 

SENATOR AYALA: Again, going back to the employer 
that causes the problem, I think that they should be dealt with, 


MR. RE:mY: I believe there are penalties to an 
employer that has hired somebody illegally. 

SENATOR AYALA: What are you doing about 

MR. REMY: That's not an enforcement action on 
our part, but there is an enforcement action if you are 
hiring -- 

SENATOR AYALA: Who's responsible for that? 
Senator Hughes just talked about that question. 

If we just talk about it, it's getting over our 
heads, yet it continues to happen all the time. 

MR. REMY: I believe that's an INS issue. 

SENATOR AYALA: No, the hiring of these people. 

MR. REMY: But indeed — 

SENATOR AYALA: Hiring of these people, and 
taking money for services they're not going to get is not an INS 
problem. It's a federal problem, I guess, or a state 

MR. REMY: Yes, it is, indeed. And it's federal 



CHAIRMAN BURTON: No, the point is, not federal 

The state's taking their money, but I think you 
said that, I would imagine if somebody sued for the money, they 
would, one, be able to get it back. But if it's called to your 
attention that an undocumented filed, and they weren't a 
citizen, that you'd then turn that information, I think, over to 
our Labor Commissioner, somewhere, some how. 


I think we even, at one time/ we used to have 
sanctions for hiring undocumented people. I think that's in 
some of the things. 

The question, back to the SDI rates, where the 
Department opposed the Rosenthal bill, which I guess was because 
the administration wanted you to, but the fund's almost a 
billion dollars in the red. 

The Governor gave an excuse for vetoing the bill, 
that it would require a payroll tax increase, which is bogus. 


CHAIRMAN BURTON: Yes, that's what he said, which 
is a bogus statement, for openers. And it would be imprudent 
while the economy's recovering. 

I mean, I guess it's just another indication that 
the Governor wants to stick it to some working people, even 
though it was their money that bought the insurance and the fund 
was in the red. 

So, wouldn't the Department support an increase 
in disability insurance if there was a bill in this session? 

MR. REMY: What we have said in terms of a 
proposal for an SDI increase, because that is one that's paid by 
the employee. 

CHAIRM7\N BURTON: We know about it. That's why 
we're having this big debate. 

MR. REMY: What I've said is that as we analyze 
the bill, we would put information forth, both in terms of where 
we stand in terms of this state, our economy, as well as the 


CHAIRMAN BURTON: How about the fact it's their 
money, and it's sitting in the government's bank? What's there 
to analyze? What it is in Tennessee or Mississippi? 

MR. REMY: What you analyze is the extent of the 
benefit/ and how the system works, whether you need any changes 
in the system at the same time that you increase level of SDI 

CHAIRM7\N BURTON: What changes do you need in the 
system? It's their money. 

MR. REMY: It's also administered. 

CHAIRMAN BURTON: No, it's their money. 

MR. REMY: That's right. It's paid for by the 
employee, and it's in the fund. 

CHAIRMAN BURTON: Right. So, what changes do you 
want in the system? They got to work 20 years before they get 
it? It's their money. 

Could you tell us how much we could reduce their 
rate, as long as the surplus is there, and keep things the way 
it is? 

MR. REMY: The rate has been held stable for the 
last — 

CHAIRMAN BURTON: I understand that. I'm talking 
about reducing it. 

MR. REMY: If you reduce it much more, you will 
begin to actually put the fund once again in the direction of 

CHAIRMAN BURTON: I mean, if you take a dollar 
out of the fund, you're putting it in the direction of deficit. 



MR. REMY: That's true, but right now, the fund 
is right at about a balanced level. 

CHAIRMAN BURTON: No, right now the fund is in 
surplus close to a billion dollars. 

MR. REMY: When I say a balanced level, the fund 
is at a level in which the amount of money going in, and the 
amount of money going out, is in about a balance. 

CHAIRMAN BURTON: Right, and there's a surplus 
sitting there besides. 

MR. REMY: And there is a surplus in the fund; 
that's correct. 

CHAIRMAN BURTON: So, what would it take to 
return that surplus? If we can't return it to the workers in a 
benefit increase, what kind of cut would it be to return that to 

MR. REMY: Well, you either reduce the rate, and 
I think it's at .6 now, as I recall. You reduce the rate, which 
would mean the employer would be paying less into the fund — 


MR. REMY: Excuse me, employee would pay less 
into the fund, or you would increase the benefit. 

I think the request has been to increase the 
benefit rather than reduce the rate. 

CHAIRMAN BURTON: I understand that, but the 
Governor's seen fit not to increase the benefit. 

So, when are you going to decide whether or not 
you could support it? Or, is this, in fairness, a decision that 
he's got to make, and not you? 


MR. REMY: I think Governor is the one who makes 
that decision. Hopefully, we would have input. 

Any other questions? 

CHAIRMAN BURTON: Any support? Any opposition? 
SENATOR HUGHES: Move the appointment. 
CHAIRMAN BURTON: Moved by Senators Hughes and 

Knight . 

Call the roll. 

SECRETARY WEBB: Senator Ayala. 
SECRETARY WEBB: Senator Hughes. 

SECRETARY WEBB: Hughes Aye. Senator Knight. 

SECRETARY WEBB: Knight Aye. Senator Lewis. 

SECRETARY WEBB: Lewis Aye. Senator Burton. 

SECRETARY WEBB: Burton Aye. Five to zero. 
CHAIRMAN BURTON: Congratulations. 
MR. REMY: Thank you very much, Senator. 
[Thereupon this portion of the 
Senate Rules Committee hearing was 
terminated at approximately 3:00 P.M.] 
— ooOoo — 



I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

y^ IN WITNESS WHEREOF, I have hereunto set my hand this 

>4y day of /^(^X<4/^^^ 1998. 

Shorthand Reporter 


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